Electricity Privatization: increasing rates worldwide

by Graham H. Cox last modified 2015-04-16T08:54:08-04:00
It is not just in Ontario that privatization has lead to increased costs. Examples from around the world show partial and whole privatization of electricity assets lead to rate increases.

Even efficiency claims made by those promoting privatization are now rejected.  There is little peer-reviewed evidence that privatization leads to increased efficiency or quality of services. Where there have been increases in efficiency it has come at the expense of high quality jobs with savings going directly to the company profits instead of to rate payers.

United Kingdom

In the UK, electricity was privatized in the 1990s through a variety of IPOs and direct sales as the Conservative government was ideologically against public ownership. Research by campaigning organization We Own It and Corporate Watch UK have shown that electricity bills increased 20% in real terms over a six year period between 2007 and 2013 in Britain. Energy bills in the UK are $292 higher today because of privatization. Calculations

Australia

A similar situation to the UK played out in Australia in the 1990s. When two states in Australia privatized their electricity systems prices increased and services quality declined. In one state, the first eight years of privatization saw rates rise 40% — faster than all other publicly owned electricity in Australia — to become the most expensive power in the country.

In 2002, South Australia paid 30 per cent more than their publicly owned power in neighboring states. Private industry found that their prices had increased by 25 per cent above inflation rates..

Opposition to continued privatization of power in Australia remains sky-high. Over 67% of Australians are opposed to plans for partial privatization that are similar to the Ontario Liberal’s plan for Hydro One.

United States of America

One of the largest federally owned public electricity companies in the USA, the Tennessee Valley Authority, rejected plans in 2013 to privatize. The privatization proposal came from the Obama administration to generate money for the federal government — just like in Ontario. However, Democrats and even normally pro-privatization Republicans united against the sale of the New Deal era company because privatization would have lead to increased rates for businesses and consumers.

Nigeria

Increased prices because of privatization are not just a industrialized world issue. UK private energy companies promoted privatization in Nigeria as a way to invest in renewal of aging electricity infrastructure. However, when Nigeria privatized its electricity system to UK companies in 2013, prices increased between 25% and 88%. .

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