TORONTO—A recent announcement that the Wynne government intends to sell off 60 percent of Hydro One as part of a plan to fund strategic investments in Ontario’s infrastructure is being met with anger and outrage from both opposition parties. Algoma-Manitoulin MPP Mike Mantha joined NDP leader Andrea Horwath and many of his party compatriots in a noisy protest, pounding desks and shouting, when Premier Kathleen Wynne was a no-show for the first Question Period following the announced sale—a protest that led to the MPP and his fellow NDP MPPs being ejected from the legislature.
Premier Wynne was across the street at an event announcing the sale as well as changes to beer sales that will finally see beer sold in grocery stores (as well as a new tax being levied on the beverage).
[quote_right]“This is a terrible idea,” said Mr. Mantha of the Hydro One sale. “We will be doing everything in our power to make the government reverse this decision.”[/quote_right]
The announced Hydro One sale will begin with an initial public offering (IPO) of 15 percent on the stock market. Over an extended period of time, the province intends to sell off up to 60 percent of the company, which controls electricity transmission and a large chunk of distribution in the province.
A committee headed up by former TD Bank CEO Ed Clark midwifed the plan into existence through a report submitted to the premier. Mr. Clark is chair of the Premier’s Advisory Council on Government Assets, whose committee was charged with finding ways for the province to fund badly needed infrastructure investments. The former banker has insisted the deal will not be a windfall for Bay Street investment firms.
Under the plan, private owners would be limited to 10 percent of stock apiece, allowing the government to keep the largest single share (and maintain ostensive effective control). With a valuation of up to $15 billion, selling 60 percent of Hydro One would raise as much as $9 billion. Most of the money raised would be used to pay off the utility’s accumulated debt and $4 billion would be deposited into the Trillium Trust for transit. Former Canada Pension Plan Investment Board head David Denison will take over as chair of the board of the new-public/private entity, replacing former cabinet minister Sandra Pupatello, who will remain on the board.
As part of the plan, Brampton Hydro One will be hived off from the rest of Hydro One and sold separately in a sole-source deal to a consortium of other local distribution companies. Those companies include PowerStream, Enersource and Horizon. All four of the companies will merge and the government will receive either $607 million in cash or a 17 percent stake in the new company.
First Nations have expressed their displeasure with the plan as well. “It is critical that Ontario Premier Kathleen Wynne consider First Nations a vital partner in the decisions related to this sale,” said Serpent River First Nation Chief Isadore Day, who is running for Ontario Regional Chief. “These resources are assets intended to benefit everyone and must therefore include First Nations in both the discussion and decision-making process. Generation, transmission and distribution of electricity all occur on treaty lands. It is a requirement that First Nations are inclusive at all stages of this sale.”
“Ontario’s New Democrats will fight to protect public ownership of Hydro One after Kathleen Wynne announced her plan to sell off 60 percent of Hydro One earlier this morning,” said Ms. Horwath in a release shortly after the announcement. “Ontario’s public hydro system supports healthcare, education and social services. Kathleen Wynne’s plan to privatize Hydro One will put all that at risk and leave Ontarians paying higher hydro bills.”
Ms. Horwath noted that earlier privatizations of hydro under Progressive Conservative governments led to the tripling of hydro bills. “Since 2002 privatization has driven the cost of energy from 4.3 cents per kilowatt-hour to 14 cents per kilowatt-hour,” notes the NDP release.
[quote_left]“Kathleen Wynne won’t make any guarantees about rates, and neither can Ed Clark,” continued Ms. Horwath. “Ontarians didn’t vote for this. They don’t want this and we’re going to make sure that Kathleen Wynne hears that loud and clear over the coming weeks.”[/quote_left]
“There was no discussion of this during the election,” said Mr. Mantha. “The Liberals have no mandate to proceed to this without broad public consultation.”
For their part, the Progressive Conservative official opposition maintains that the Liberal government cannot be entrusted with the sale of Hydro One, citing the unpopular Highway 407 sale as an example.
“The law must be followed and any proceeds from the sale of Hydro One must be used to pay off its $27 billion debt,” said Jim Wilson, Progressive Conservative interim leader, asking the premier to “commit today that you’re going to pay down the electricity debt with the proceeds from the sale of Hydro One and not force Ontario families to pay for the financial mess you’ve created.”
Mr. Wilson went on to say that if the government didn’t follow the law and instead used it for other purposes, it would lead to even higher hydro rates. “If you don’t pay off that electricity debt from the sale proceeds of Hydro One, the cost of that debt will show up on the hydro bills of every family in the province, it will be a debt retirement charge on steroids and it will probably be hidden in the cost of electricity.”
The Canadian Union of Public Employees (CUPE) for its part is mounting a massive campaign to stop the province’s plans to privatize Hydro One, CUPE Ontario President Fred Hahn announced. “The Hydro One selloff is a short-sighted plan by the Liberal government that will mean higher electricity bills and a loss of billions in long-term revenue that could be invested in public infrastructure and services,” said Mr. Hahn. “But Hydro One isn’t sold yet. There’s time to stop this privatization mistake and we’ll do everything we can, from mobilizing people across the province to legal action, if necessary, to stop the Liberals from selling off what we’ve built together over more than a century.”
“Taking Hydro One out of public hands and selling it to the private sector is a betrayal of Ontarians, who overwhelmingly support keeping Hydro public,” continued the union leader. “It will mean losing control of this valuable public asset, which has a long history of providing stable, reliable electricity.”
CUPE Ontario and lawyer Steven Shrybman released a legal opinion purporting to show that the government’s plans are “not only short-sighted, but also will be illegal.”
“Let’s be clear, we stopped privatization in 2002 and we’ll stop it again in 2015,” said Mr. Hahn. “When the PCs tried it, the Liberals were very vocal in their opposition to selling Hydro One. We truly hope they’ll return to their roots and protect the public good by stopping this sell-off. But if they don’t, we’ll mobilize in every corner of the province and stop it in court if we have to.”
“My first comment would be ‘its not hers to sell’,” said Greg Young, who along with other Manitoulin Islanders has been circulating a petition against Hydro One increases. “It belongs to the people of Ontario. Lets face it, pre-1999, when we got our power from the completely public , Crown corporation of Ontario Hydro, electricity was reasonably priced for Ontario Energy Consumers. But I think in light of some very recent developments, it’s pretty clear that the Liberal government has had this planned for some time.”
Mr. Young posits that the Liberals have an ulterior motive in their timing of this announcement. “I think one main reason they are trying to go ahead with it now is to try and dodge the Ombudsman’s final report. Wynne knows it is going to be damning for the Liberals and expose the corruption at the top that is causing so much problem with high hydro rates.” Mr. Young noted that Ombudsman Andre Marin has said publically that he is concerned his office will not retain the power to investigate public complaints if 60 percent of Hydro One is privatized. “We must keep Hydro One public, so they have to be accountable to the energy consumers of Ontario.”
The Liberals have also been accused of linking the Hydro One sale to the announcement of beer sales in grocery stores to deflect attention away from the asset sale.
“You might be able to buy a beer in the grocery store,” quipped Mr. Mantha, “but you won’t be able to afford the electricity to keep it cold when you get home.”