TINKER, TORY, WOBBLER, WHY? the Political Economy
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TINKER, TORY, WOBBLER, WHY? The Political Economy of Electricity Restructuring in Ontario, 1995-2003 by CHARLES FRANCIS JAMES MARTIN A thesis submitted to the Department of Political Studies in conformity with the requirements for the degree of Doctor of Philosophy Queen's University Kingston, Ontario, Canada August 2007 Copyright © Charles Francis James Martin 2007 ii ABSTRACT The Ontario Tories' 42-year hegemony in government (1943-1985) was wrought through clever policies which often utilized Crown institutions to promote prosperity or to oblige or mollify vying interests. Ousted in 1985, though, they used their time in opposition to revise the Tory doctrine. In the 1995 election, the Tories emerged a tougher, more truculent group quite unlike their predecessors. Campaigning on their Common Sense Revolution (CSR) platform, they promised to eliminate red tape and vowed to obliterate all ostensible economic barriers which were impeding commerce in the province. In the CSR, the Tories identified Ontario Hydro (OH), the province's lauded publicly-owned power monopoly, as a troublesome and inefficient Crown entity which required fundamental reform. Portions of OH, they hinted, would likely be sold. Once elected, the Tories worked hurriedly to demolish OH and destroy public power in Ontario. For nearly 100 years, OH proved a pivotal component within the province's political economy for its provision of affordable, reliable power and its function as a policy tool to incite and direct development. A Tory government fought to instigate public power in the early 1900s and, in the late 1900s, a Tory government was fighting vigorously to rescind it. Why would they now renounce Crown power? It is the intent of this thesis to elucidate the Tory government's involvement in the transformation of Ontario's electricity industry from 1995 to 2003. Distinguishing electricity as a special, strategic staple, this thesis uses a pro-state, pro-staples industry political economy approach to discern how and why the Tory government sought to restructure the electricity sector. Essentially, it posits that the onslaught of neoliberalism, iii the emergence of novel generating technology, and the faltering of OH's nuclear wing all had a huge part to play in provoking the Tory government to initiate its reforms. Their reforms, though, proved too hasty, haughty, and fraught with ambiguity to work properly. While their open, competitive power market and attempts to privatize Hydro One failed horribly, the Tories' energy re-regulation strategy did hold promise to allow the state to retain a prominent role in the power industry. iv ACKNOWLEDGEMENTS One Friday, one winter, after my regular shinny hockey game, after my Mom's fish and chips for supper, but before my lullaby, Heartbeat, on TVOntario, I thumbed through a book which would prove to have a very profound effect on me and my ensuing intellectual interests. The book, The Politics of Development by H.V. Nelles, proffered a history of the logging, mining, and hydro-electricity industries in Ontario, their differing influences on the province's political economy, and the provincial state's diverging interventionist policies to promote their further exploitation. I took the book out from the library for an essay I hoped to write for an undergrad course on historiography I was taking taught by the urbane Dr. Matt Bray, a historian I admired tremendously. I keenly worked through the book over the weekend. The book proved pivotal to me because it was probably the first time I had read a scholarly analysis about Northern Ontario and, also, it was probably the first time that I became aware of the explanatory power of political economy. I was enthralled with the book. I was captivated by political economy, particularly the staples approach. Its proven tough, though, in the intervening years, to study provincial political economy and to pursue inquiries into provincial resource policies. I am grateful, therefore, to those people who encouraged me to write this thesis and who lent a helping hand in its construction. Foremost, I would like to thank Dr. Margaret Little for undertaking the task of supervising me and for her steadfast support. Thank you for the mugs of tea, the long talks, and for offering so much of your time to reinvigorate, enlighten, and inspire me. I am truly thankful. Thanks, too, to Dr. Kim Nossal and Dr. Jonathan Rose for offering their counsel throughout. The professionalism, poise, and eloquence they exemplify v impresses me immensely and I try hard to emulate those traits. Thank you to Ms. Barbara Murphy in the Political Studies office for her help getting through all the forms, copy codes, keys, cheques, contracts, and deadlines I got tangled in over the years and for her continuous kindness. Outside of Queen's, I would like to thank those individuals I interviewed, both named and unnamed in the thesis, for permitting me the privilege of spending time with them to discuss electricity restructuring and for sharing their insights with me. Thank you to the archivists at the Archives of Ontario and the Hydro One Networks Archive for their friendly assistance. Merci to Monique for cheering for me. Thanks to Andy and the boys at Valley for always offering me a shovel and the opportunity to put a few bucks in my pocket whenever I could. Finally, thank you to my family for comforting, financing, and encouraging me to commit, proceed, and complete this project. Our arguing (debating) and laughing together formed the foundation upon which this thesis was built. I am very thankful for all your help and all your love. CJFM Hanmer, Ontario 27 August 2007 vi To my family vii CONTENTS ABSTRACT.......................................................................................................................iii ACKNOWLEDGEMENTS.................................................................................................v ABBREVIATIONS.............................................................................................................x CHAPTERS 1 INTRODUCTION: THE ABDICATION OF CROWN POWER IN EMPIRE ONTARIO...........................................................................................1 The Modification of Historic Tory Tenets...................................................4 Tinkering and Wobbling..............................................................................9 The Urgency of Transformation................................................................12 Staples Political Economy Resharpened....................................................13 Cue The Lights...........................................................................................22 2 THE MARCH OF THE KILOWATT ARMY: THE FIGHT FOR PUBLIC POWER IN ONTARIO............................................33 Stagnation and Statism...............................................................................38 Fury Before the Falls.................................................................................43 Public Power Beckons...............................................................................50 The Propaganda Attack Begins..................................................................69 Niagara Falls, the Tories Rise....................................................................73 Power for the People..................................................................................77 Conclusion.................................................................................................79 3 TRILLION DOLLAR BABY: EXTERNAL FORCES IN THE FIGHT FOR ELECTRICITY REFORM IN ONTARIO............................................................95 Government Interest in the Lucrative Prizefight.....................................100 The Neoliberal Fighters Enter the Energy Ring......................................106 The Supraconstitution as Referee............................................................114 Technology Proves Victorious.................................................................121 Conclusion...............................................................................................127 viii 4 WHEN HOLDING HANDS IS NO LONGER ENOUGH: THE INTERNAL LUST FOR ELECTRICITY REFORM IN ONTARIO..........................................................137 Electricity is Special................................................................................141 From Hydro to Fission: Ontario's Nuclear Fallout.................................145 The NDP Precedence for Privatization....................................................151 The Tumult at Ontario Hydro..................................................................154 Conclusion...............................................................................................167 5 FUMBLING THE LIBERALIZATION BALL: TORY POWER POLICY AND THE GOAL OF ENERGY RE-REGULATION............................................................................184 Energy Re-Regulation and Governance Strategies..................................187 The Re-Regulation Gameplan..................................................................193 Tackling the Tories in the Courts: The Hydro One IPO.........................196 Greed and Grime: The Dirt of Power Privatization................................201 The Tories Score Some Late Points, But Lose........................................204 Conclusion...............................................................................................206 6 THE BLACKOUT: ROASTED BY ONTARIANS,