The Political Economy of Electrical Power Generation

This article examines the procurement practices of Canada s three largest electric power utilities, Ontario Hydro, Hydro Quebec, and B.C. Hydro in terms of their impact on the technological development of the electrical power equipment industry in Canada. The theoretical underpinnings of this analysis are that under certain economic, technical and institutional conditions, procurement as managed by large publicly owned corporations with a high level of technical capacity can be a powerful instrument of industrial innovation. The paper describes how in the face of weakening market power following the twenty-year expansion phase in the industry (1960–80) and global restructuring among electrical power equipment suppliers, the three utilities have been forced to reassess conflicting commercial and technological objectives. The authors point to Hydro Quebec's signing of a recent series of strategic production agreements with key suppliers as an example of a new approach lo procurement through concentrated use of limited market power in critical product areas. The paper concludes that the distribution of risks involved in technology development between buyers and sellers is dependent on market structures. Secondly, the nature of these client-supplier interactions in management of risk will reflect the internal coherence of an organization's commercial and technological strategies.