Extremely bright people say “I don’t get it” more often than other people.
My brother gleaned this fact from a university course on geniuses. While counterintuitive, it makes sense when you think about it. Geniuses, of course, do not grasp less than non-geniuses; on the contrary, they are confident enough to know when they understand less than they should, and are willing to admit it.
It’s the dim-bulbs who vacantly nod, pretending to know what they are hearing, too embarrassed to confess that they don’t.
I like to think that Alberta has an unusually high percentage of bright people. That’s why it makes sense that the percentage of respondents who told Ipsos-Reid in December that they were “not knowledgeable” (54 per cent) about the possible sale of Enmax, Calgary’s utility company, did not diminish after the city’s $300,000 public awareness campaign ended in March.
The percentage who admitted to being less than adequately knowledgeable has actually increased since September, when it was 49 per cent. Sometimes, the more we know, the more we know we don’t know.
Utility divestiture is a formidable topic. The potential sale of either Enmax or Epcor involves a matrix that includes the complex business of power generation and distribution, governmental regulation, new international competitors, power grid integration, and promising new technologies (such as home furnaces that both generate electricity and heat the house), to name only the major factors.
Then there are union contracts and bureaucracies to take into account, alternative uses for potential sale proceeds, the ever-fickle future, and adequate valuations.
Edmontonians, when they decided to keep Epcor under city ownership in 1999, went through a remarkably similar process to Calgary’s just-ended one, and came to the same conclusion that Calgary city council did earlier this month – keep it all for now.
The arguments we heard from both cities were almost identical – don’t sell the goose that lays the golden eggs, it’s a historical asset that practically defines the city, we don’t want profits from “our” company leaving the city, we don’t want higher utility bills, keeping it is what the people want, etc.
What such thinking tends to gloss over is the inherent conflict in city-owned energy companies, and the myriad options available in divesting part or all of them. It’s not really a keep-or-sell debate at all.
Both Calgary and Edmonton now own businesses that have an obligation to shareholders (the city’s citizens) to charge their customers (by and large the same citizens) as much as possible.
When I pointed out this oddity to Calgary Mayor Dave Bronconnier last September before he became mayor, his response was that co-operatives work fine that way – they are owned and patronized by the same people.
But defying that analogy is that our city council must also regulate its own company. It can work, but it’s inherently suspect. (What happens when Enmax or Epcor requests re-zoning?) Also, co-ops tend to be uncompetitive, unprofitable businesses.
Everyone knows the adage about selling high. If Enmax and Epcor are profitable today, surely selling in one way or another is more attractive than ever. Should we wait until they are losing money before we consider selling? Obviously not. Not selling today could easily mean not selling ever.
But could Enmax or Epcor ever “lose” money? Of course.
Alberta’s provincial government has recently begun to angle toward making the electricity and gas business in Alberta more attractive for newcomers.
Regulatory changes are almost certainly in the pipes, making the sale of Enmax or Epcor increasingly less attractive to potential purchasers.
These changes may well include laws forbidding “vertical integration” leveraging, meaning that Enmax and Epcor might have to split up into distribution, production and retail arms to one degree or another, or submit to rigorous oversight.
Other regulatory changes will almost certainly include removing the tax advantages of being city-owned.
With the Klein government intent on making deregulation more tenable, the Tories have been forced to make life more difficult for the big, city-owned utilities. What influenced a decision on May 10 may be obsolete in June. Will we have to start the consultative process all over again?
To address the common concern about foreign ownership, surely no Canadian who has sold his company at a premium to an American has complained about it. I didn’t hear J.C. Anderson making a fuss about the billions paid for Anderson Exploration.
In fact, he has already put some of those American bucks right back into a new Canadian oilpatch venture.
But the biggest contradiction of them all underlies the Ipsos-Reid poll.
The result that made headlines last April, and that the Calgary aldermen have repeatedly used to justify their May 10 decision, is that 61 per cent of Calgarians “oppose the idea of selling Enmax.”
This is an easy concept to grasp, so it’s the oft-repeated one.
But look deeper and things are not so clear. That same poll had drastically contrary results when the options were put differently. When the question was: “There are different ways the city could sell Enmax. I would like you to tell me whether you agree or disagree with each option,” then 70 per cent agreed with the idea of turning Enmax into a not-for-profit co-operative; 63 per cent agreed with the sale of Enmax through a public offering; and 47 per cent either moderately or strongly agreed with the idea of selling portions of the company. How could that be?
Obviously, at least a third of the 61 per cent who advocated “keeping” Enmax didn’t even grasp what that meant. By contrast, I suspect there were a good number of geniuses among the 11 per cent who said they “didn’t know” or were “unsure” – after all, they could admit they “didn’t get it.”
It begs the question: Was this recent poll an adequate guide? No way. The dim-bulbs had the swing vote.
The last several months have been a time for our municipal leaders to make some tough decisions, hopefully based on their expertise and sound judgment. Using wishy-washy poll results to justify a decision is a cop-out, a way to abdicate responsibility.
Unfortunately, as the Enmax management and Calgary City Hall bureaucrats were pushing for a quick sale last summer, the final opportunity to sell Enmax (or Epcor) for a good price was fading into a new world of changing regulations.
For now, we have just seen another reason why cities don’t do well in business.
It’s pretty clear that all of this positive feeling toward “our” company will evaporate when some competitor knocks on the door promising to halve electricity bills.
By then, Enmax and Epcor could well be unattractive relics of the past, especially if the dim-bulbs keep calling the shots.
