At one end of a London plaza, a Fairweather Factory Store had its doors open yesterday as an air conditioner worked overtime under store lighting.(from Conservation Cool to Some, London Free Press, August 3, 2006, article here)
At the other end of the plaza, by the northeast corner of Wellington and Exeter roads, half the lights in Pier 1 Imports were shut off and its air conditioner set to a warmer temperature.
This contrast in power usage came a day after Premier Dalton McGuinty urged people to reduce power use after the sweltering heat pushed electricity demand in London and the province to new highs on Tuesday and sparked a small blackout yesterday.
Let's say, for the sake of argument, that there really is a "shortage" of electricity in Ontario. In other words, during the warmest days of the summer, air conditioning and other uses push the demand up slightly beyond the supply offered by the local utilities. What might the government of Ontario do about this situation? Even without any economics training beyond grade 12, I find the solution entirely obvious -- raise the price of electricity to meet the marginal cost of importing it from elsewhere, and develop a long-term policy of encouraging private investment in and ownership of electricity generation in Ontario.
But the government is terrified of alienating voters, and cannot consider visible price increases. So it focuses on predictably useless pleas for conservation. But how are consumers supposed to know what is the appropriate level of energy use in their homes and businesses? Turn off the air conditioning? Turn off the lights? Turn off the computers and send people home? Stay home from the mall? Of course, faced with a given steady price for electricity and mushy pleas from the government, people respond to the former. Anyone familiar with Joseph Heath's excellent Efficient Society will recognize that the free-rider problem cannot be overcome. What incentive do I have to reduce my consumption (and my comfort and my business' prosperity) when I know that anyone else can simply ignore the problem?
