100 years of publicly-owned electricity in Canada
On April 4, 2022 Fred Stafford and Matt Huber published an excellent article for the online version of Jacobin magazine titled “In Defence of the Tennesse Valley Authority”. In the context of the political economy of the USA, the article advocates for an increase of public ownership of the electricity sector via the centralized provision of electricity, as exemplified by the TVA. This in contrast to decentralized generation, which tends to be privately-owned.
In providing rationale for their argument, the article notes that “across the world, the cleanest and most decarbonized grids are mostly powered not by distributed solar and wind, but massive amounts of publicly owned centralized hydropower and nuclear generation.”
I had been compiling historical data for Canada for some time and hence on April 25 I tweeted a complementary analysis to the article highlighting Canada as ONE of those countries with “clean and mostly decarbonized grids mostly powered by massive amounts of publicly owned centralized hydropower and nuclear generation.” This is the accompanying blog post to that tweet.
Canada as a Publicly-Owned Grid
The graph below shows the evolution of publicly-owned capacity from 1917 to 2017, as a percent of all generating capacity.
I have annotated the graph to include some of the highlights - from a start of 20% public ownership in 1917, to a peak of 87% in the early 1990’s, to the current 64% public ownership.
The graph is based on publicily-available data, generally from Statistics Canada, and its predecessor, the Dominion Bureau of Statistics. It includes three types of generation: publicly-owned utilities, privately-owned utilities and non-utility generators (private).
As far as I know, I am the first researcher to compile and present a century’s worth of ownership-based capacity data for Canada.
Some highlights of the last 100 years based:
1) Like most countries, Canada’s electricity industry was mostly pioneered by private enterprise. From the 1880’s to 1917, when we first have reliable and historically-comparable data, public ownership of generating capacity was generally less than 20%. Distribution and transmission were probably also low, but this data is not readily available and/or more difficult to compile (see below).
2) The foundational political win for “public power” in Canada was the establishment by the provincial government in Ontario (ON) in 1906 of the publicly-owned Hydro-Electric Power Commision of Ontario (“HEPCO”, the predecessor to Ontario Hydro). This was a hard-fought battle - it was the main issue in the 1905 provincial in Ontario, as I discuss in this pod.
3) That huge bump in public capacity you see in the 1920’s reflects the coming on stream of the HEPCO’s Beck hydro project at Niagara Falls. At the time, this was the largest generation plant in the world, public or private.
4) The next large development in the political struggle for public ownership was in 1944-46 when in Quebec (QC) and in British Columbia (BC) the provincial governments purchased some of the private utilities (investor-owned utilities (IOUs)) and transferred the assets to newly-established publicly-owned utilities. This process was based on and inspired by the HEPCO experience - a real-world example - of nearly fourty years - that public enterprise could not only “work”, but could also out-compete private enterprise. Internationally, other governments were making the same policy decisions of nationalizing electricity utilities as WWII was ending, including in France, the UK and Chile, among others, as I discuss in this pod.
5) There was very significant capacity growth from the end of WWII to the mid 1980’s in Canada, and most of that was achieved by public utilities. That growth is not shown in the graph (another future blog), but the relative growth of public versus private enterprise is clear from the figure.
6) The next annotated development in the figure was in the early-mid 1950s when the provincial government in Manitoba (MB) purchased some of the private utilities and transferred the assets to its newly-established public utility. In Ontario, the second, even larger, hydro development at Niagara Falls, Beck II, come on stream at that time as well.
7) In the early 1960s the BC and QC governments purchased most of the remaining IOUs and transferred the assets to their public utilities. Indeed, like in Ontario in 1905, the nationalization of the remaining IOUs in Quebec was the subject of a provincial election in 1962.
8) The first significant reversal of the public ownership momentum was in 1992 in Nova Scotia (NS), when it privatized its public utility.
9) In the lead-up to sector liberalization in Ontario, the next major develpement was the government-imposed “decontrol” of the publicly-owned Bruce Nuclear Generation Station (BNGS), one of three publicly-owned nuclear stations in Ontario (the other two being Pickering NGS and Darlington NGS). The result was a long-term lease and transfer arrangement to a private company that would invest in and refurbish/operate the BNGS assets and receive the corresponding revenues and profits. The provincial government would maintain titular ownership of the existing assets, pre and post-refurbishment so it would not be an outright privatization. This arrangement is a form of Public Private Partnership (PPP). In terms of categorization, this mixed arrangement could be categorized as a third category in my analysis. But for simplicity, including backward data comparability, I have decided to maintain the public/private dichotomy, and consider it as “not public” (because investment decisions and profits accrue to the private entity). For this reason I categorize it as “private” and hence its decontrol leads to a decrease in public “ownership” in the figure above.
10) The last major develpment I note in the figure is the closing down in the early 2010’s of all coal generating plants in Ontario, all of which were publicly-owned.
How about Distribution?
The table below provides a snapshop of the distribution sector in Canada. I was not able to find comparable time series data at Statistics Canada or any other government site on the ownership of distribution companies historically. I was, however, able to identify a compilation of distribution data by Benoit Marcoux, another Canadian electricity analyst.
Public ownership of distributions sector , at about 84% of subscribers, is made up of three types of distribution companies. The largest are the provincially-owned utilities, such as Hydro Quebec or BC Hydro. They have 52% of all subscribers, so more than half of Canada is served by these large enterprises. These are mostly vertically-integrated, in that they also provide the transmission and generation.
About a third of Canadians (32%) are served by municipally-owned distribution companies. This is the norm in Ontario, for instance, with Toronto Hydro and Ottawa Hydro being the largest examples. Note that for legacy purposes they still are all “Hydro”, which refers to the form of generaton that they first received from HEPC when they were established after 1906. These are “pure distribution” plays - no transmission or generation.
There are a few subscribers served by co-operatives (0.1%), mostly in rural areas. These are also mostly distribution-only enterprises.
Lastly, a total of about 16%, or about one-sixth of Canadians, are served by private distribution companies. These could be part of the a vertically intergated company such a Nova Scotia Power, or distribution-only enterprises.
Canada as a Decarbonized Grid
Readers to this blog will know that Canada has a very low-emissions grid. Please check out the country profiles section for further information.
Here I present the data by generation capacity (instead of generation in the country profiles), and provide details on the difference between the three classes of generation providers, for 2017.
Overall, the figure below shows Canada has 76% zero-emission generating capacity - one of the cleanest grids in the world.
Generating assets owned by public enterprises make up 64% of total capacity. These are the cleanest class of generation providers, with 86% emissions-free generating capacity in 2017.
Private utilities, which made up 29% of generating capacity, had 56% zero-emissions capacity in 2017.
Non-utility generators, which made up just 6% of generating capacity in 2017, also had 56% zero-emissions capacity that year.