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The debate continues: in most countries, utilities such as electricity and water supplies are considered essential services that are to be provided by government and funded by user fees.

Article Excerpt
Generally, utilities have been considered a public good--services that should be available to all citizens at reasonable cost. But, under public management, utilities have not always performed very well: Ontario Hydro is a case in point.

Officials working for the public good plunged into nuclear technology, building plants that racked up massive cost over-runs, were finished years behind schedule, and wore out years ahead of schedule. The result is a public utility that is saddled with a monstrous debt and is barely able to supply the electricity needs of the province.

The magic solution to problems such as these that is touted by neo-conservatives is not to fix the problems in the public system. The answer, they say, is privatization: remove the dead hand of bureaucracy from the control levers and private enterprise will deliver low-cost power/water/transportation and joy will spread throughout the land. In theory, it works like a dream: supporters of a private system say competition will reduce rates as will economies of scale. The arguments in favour of privatization go something like this:

* The private sector can provide desperately needed capital to build and maintain expensive systems. Conservative governments say the public sector simply cannot afford to finance the cash-hungry infrastructure;

* The private sector has a great deal of expertise;

* Competition provides more incentives to operate efficiently; and,

* Up-to-date systems run efficiently by experts will lead to reliable service with lower costs to consumers.

But, more often, privatization of utilities seems to end in disaster. Opponents argue that the only thing privatization does is protect large commercial and industrial customers and private power companies. At the same time, the rates of residential and small business customers are driven up. In the name of efficiency, private companies cut costs in order to boost profits. Critics say decisions on providing essential services such as water and electricity should not be based on...

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