The loss of electrical power in downtown Calgary has made national news–it is a news story. Such a story has never occurred in Canada before.
It prompts me to ask some questions.
Would the loss of power in downtown Calgary have occurred if Enmax were privately owned? Would management and the Board of Directors have done things differently? Would the engineers have mapped out more robust redundancies and alternate power routings? Would the finance and risk managers have spent more money and capital to protect against this eventuality–understanding that money invested in protecting Calgary’s downtown core was well-spent when contrasted to the potential loss of revenues–instead of refusing to spend this money and capital and holding it for their political masters the City of Calgary?
Would the Board and CEO survive an incident of this magnitude if the company were privately owned? Or will the politicians defer this question?
These questions are probably not answerable. Counterfactuals are always difficult. However, I’m not aware of a similarly localized significant event under a privately-owned power supplier. And such an event would surely have made the news. We have had power outages and grid failures, but not a major black mark emerging from a private power supplier.
I’m therefore disinclined to pursue the counterfactual question and simply arrive at the conclusion that a publicly-owned power provider has caused this major power outage, where a similar experience is unavailable for a private power supplier. That is sufficient for my purposes and my understanding.
Under the current ownership structure, all Enmax employees, directors, and officers (“Enmaxians”) are owned by a municipality and not immediately accountable for capital and other related costs to the open market. They cannot benchmark themselves quickly and easily against competing utilities. Neither can they be rewarded with participation in the equity of the utility, such as is the case with private enterprise opportunities.
The Board of Directors has no guidance as to the markets assessment of the cost of capital for Enmax, and this key pricing variable is therefore left out of the equation. This will no doubt result in an increased possibility of bad decisions.
The fact that Enmax is owned by a political entity necessarily introduces politicization into the process and appointments of employees. This cannot be avoided. For example, the tumult raised around the President’s spending habits some years ago can be directly attributed to a political issue rather than a financial or operational metric issue.
Enmaxians therefore would, should, and will welcome a privatization of Enmax. It reintroduces them to the real world of commerce and finance. It can price their cost of capital much more effectively and perform their tasks in a much more meaningful manner. Enmaxians, like Calgary taxpayers, would celebrate the privatization of this enormous utility.