Free Market Economist Blames Megaproject Overruns on Public Ownership

Writing in the U.S. hedge fund-owned Financial Post, an economist with the right-wing Consumer Policy Institute notices a problem with the over-budget cost of huge, centralized generation facilities under construction in Canada, but lays the blame on public ownership rather than scale or misguided system strategy.

Covering ground previously reported in the Energy Mix here and here, CPI Executive Director Brady Yauch observes that “in B.C., Manitoba, Ontario, and Newfoundland and Labrador, public utilities are constructing megaprojects—defined as infrastructure projects costing more than $1 billion—that will cost electricity customers, at current estimates, $43 billion. The final cost to electricity customers, already expected to result in double- or triple-digit rate increases, will be a great deal higher once these megaprojects start generating power, given the track record of megaprojects of consistently coming in over budget and behind schedule.”

So far, so indisputable. However, Yauch blames the cost overruns and questionable necessity of Ontario’s commitment to nuclear generation, and big hydro projects in other provinces, on “public utilities” that do not face “any discipline through competition and market forces.”

“Private companies that lack access to government guarantees or generous subsidies,” he asserts, “avoid mega-dams and nuclear projects.”

Yauch’s pro-market Toronto think tank has previously urged the privatization of Canadian airports, the abandonment of government-backed mortgage insurance, and the replacement of Canada’s single-payer health insurance program by private health-savings accounts.

A less ideologically-tinged analysis might have observed that numerous private companies in the United States have indeed plunged into nuclear construction projects—and now face bankruptcy and abandoned projects as a result—or that U.S. Energy Secretary Rick Perry now argues that those same companies require ongoing public subsidies to continue operation.