Blog 30 Power Play

Power

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Blog 30   POWER PLAY

One of my favourite places is New Zealand. Not primarily because it was the first national state to experience the Neo-liberal destruction of the post-war welfare state, but because New Zealand has partly recovered from that public catastrophe.

In 1994, a new Labour government was highjacked by disciples of the Chicago School of Economics, and among the things done in the next four years was the privatization of publicly-owned infrastructure. In 1998, a big lesson was learned. With credit to Wikipedia, here's the story.

The 1998 Auckland power crisis was a five-week-long power outage affecting the central city Auckland, New Zealand. At the time, all of downtown Auckland was supplied with electricity by Mercury Energy via four 110 KV power cables originating from the national grid at Transpower's Penrose substation, with two cables each connecting to two central city substations at Liverpool Street and Quay Street. The two cables connecting to Quay Street were 40-year-old gas-insulated cable that were past their replacement date. One of the Quay street cables failed on 20 January, possibly due to the unusually hot and dry conditions, although this did not warrant a crisis; the three remaining cables could still supply the central city. The second Quay Street cable failed on 9 February, leaving only the Liverpool Street cables supplying the city. Due to the increased load from  the failure of the first cables, these remaining two cables failed on 19 and 20 February, leaving the entire central city supplied by a single 22 kV cable from Kingsland, resulting in about 20 city blocks (except parts of a few streets) losing power. Queen Street was almost deserted for the first few days, as few businesses could operate. Some brought goods out onto the street to sell, but heavy rain in the first week made that impractical. Generators were brought in from around the country to power essential services and some businesses. These made queen Street a very noisy place and thus deterred customers.

In the five weeks it took to restore the power supply, about 60,000 of the 74,000 people who worked in the area worked from home or from relocated offices in the suburbs. Some businesses relocated staff to other new Zealand cities, or even to Australia. The majority of the 6,000 apartment dwellers in the area had to find alternative accommodation. Temporary power was supplied for a while from large container ships at the port supplying power to the CBD grid

The old gas cables were found to be repairable and were put back into service, but were restricted to 30 MVA capacity. The newer oil cables were irreparable, so to restore full supply to the city, a temporary 110 kV overhead line was constructed along the rail corridor between Penrose and Liverpool Street.

Subsequent public inquiries into the causes of the outage blamed two things - failure of components used beyond their replacement date, and "failure of governance." Translated, "failure of governance" means the directors of the recently privatized electric corporations were not technical people, but were solely focussed on serving their constituency - the shareholders. That is, making money for dividends.

The final lesson of the blackout I have found well summed up by

Sharon Beder, University of Woolongong, Australia:

"Electricity is not a commodity that can be governed by market forces. It is a service that is essential to human welfare and economic prosperity, and it needs to be controlled by those who place public interest ahead of commercial imperatives."

Let me conclude with two quotations offered in the New Internationalist article, "Ten Economic Myths that We Need to Junk.:

"The myth of private-sector superiority has three components that feed off and reinforce one another. First, that the private sector is always dynamic and best; second, that the public sector is costly and inefficient, and third, the conclusion that everyone benefits from the continual incremental privatization of the public sphere. All three elements are false." Andrew Simms British author.

and,

"Privatization means you take a public institution and give it to an unaccountable tyranny. Public institutions may have many side benefits. They're not for profit. They may purposely run at a loss because of the side benefits. So, for example, if a public steel industry runs act a loss it's providing cheap steel to other industries. Maybe that's a good thing. Public institutions can have a counter-cyclic property. So that means that they can maintain employment in periods of recession, which increases demand, which helps you to get out of recession. Private companies can't do that in a recession. Throw out the work force because that's the way you make money.  
Noam Chomsky, in the film "The Corporation."

So Ontarians, what can you do to offset the increase in your hydro bills?  (Remember those dividends.) Or to compensate for the inconvenience of longer blackouts, especially in those winter storms, where your TV news (when you can get it) shows your heroic public power workers labouring long days and nights to get the power flowing?

Can't help you. Your new neoliberal government has three years to go.

Maybe, after the election of the next government they might do as New Zealand has done, recover some of your public power ownership.

Or, for now, if you are a well-to-do opportunist, you could buy some of the newly-offered stock. Toronto Stock Exchange. Symbol (H).  Easy to remember.