Editorial: Monopoly money madness

Governments that allow monopolies to gauge customers not once, but twice, should rethink who foots the bill.

The Ontario Energy Board in February decided that natural gas distributor Enbridge could recoup from its customers the $22 million it spent on an out-of-court settlement for charging unfair fees from 1994 to 2002. In 2004, the Supreme Court of Canada had ruled that Enbridge’s late-payment penalties “were collected in contravention of the Criminal Code,” but the OEB decided, essentially, to trump the law — because the company was acting in accordance with provincial regulations.

In other words, even though the late-payment fees were illegal, the OEB believes that it’s okay for the utility to gouge customers not once, but twice. As if yet another reason to point out that monopolies are bad for business — and worse for consumers — was needed.

The easy call for consumers annoyed with all of this is to switch to oil or electricity, essentially swapping one monopoly provider for another. The tougher call is for the province to continue deregulating the natural gas industry, a process that began in 1985. Currently, distributors are given a monopoly — or franchise — to serve all customers in a particular area provided it is economically feasible, while customers are free to choose a retailer. The province regulates how much distributors can charge for gas supplies, guaranteeing them a nice rate of return while supposedly protecting Ontarians from being overcharged. Well, we’ve seen how well it does that.

It’s not as if the gas distribution system can be dismantled overnight. Distributors have spent millions, if not billions, building and maintaining infrastructure (at customers’ expense, of course), and the costs for a competitor to build out competing infrastructure would be prohibitive, so it’s unlikely any company would want in even if it were allowed. But the province could take a lesson from the way the federal government broke up the telephone monopoly, and grant competitors access to the pipes that have been built. Enbridge would get an access fee, and a hearty handshake for building the pipelines.

The Enbridge monopoly, and others like it, should end. At the very least, consumers shouldn’t have to pay any more for a bad system’s sins.