Privatization of Hydro One is again on the table, with the Liberals, led by Premier Kathleen Wynne, daring to do what the Conservatives tried unsuccessfully back in 2002, to great protest, and which Dalton McGuinty, Liberal leader at that time, opposed.
With a significant mass of Ontarians opposed to the sale, protests will no doubt again arise. But this time, those against the sale will not include similarly robust union voices, since the Liberals have cleverly made sure that unions associated with Hydro One will be rewarded with shares.
The Power Workers’ Union, which is affiliated with the Canadian Union of Public Employees, would receive shares worth 2.7 per cent of their salaries annually, and the Society of Energy Professionals would be in line for shares worth two per cent of their salaries.
The Liberals will attempt to do what the Conservatives tried to, however they plan to do it better, with Wynne characterizing the sell off as “broadening the ownership”.
Sorry Premier, nice words don’t hide the fact of what is really being done by this provincial government, which is to put a public asset that guarantees dividends into the hands of private ownership.
Sale of Hydro One shares will proceed with an initial public offering of 15 per cent of the utility company by March 2016, likely sooner.
It will be interesting to witness newly elected Conservative leader Patrick Brown side with New Democratic Party leader Andrea Horwath against the Liberals in this plan to sell off a public asset. Brown, a hard right Conservative, will have to make the argument for keeping the asset a public one when Conservative politics tends much more toward privatization.
At the same time, despite working to bring Hydro One union members on board, the Liberals will also have to work to calm the ruffled feathers of some 160 municipalities that claim they have not been consulted regarding this decision.
The Liberals are taking a gamble here as they attempt to find money to keep their election promise to respond to the constant cry for better transportation infrastructure. The Liberals’ long range plan would be the sale of 60 per cent of Hydro One shares to raise some $9 billion, $4 billion of which would then go to building transportation infrastructure. Revenue from the sale of shares would also go to paying down leftover debt from the sale of other electricity utility assets.
Only last spring, ratepayers were hit with increased electricity rates, so the public must be forgiven for expecting that privatization will only lead to even higher rates. Ontario’s electricity rates are, by the way, the highest in this country, in part because those “storage” and “delivery” notations on everyone’s electricity bills are reminders of the debt retirement legacy from earlier sales of pieces of the province’s electricity assets, some incurred even before the Mike Harris era, going back to the 1970s.
Already, half of the province’s energy industry is privatized. Why, then, would the Liberals consider it a good move to further privatize such a valuable asset? For one, it should win favour with investors on Bay Street, who will be happy to scoop up Hydro One shares. Profits are guaranteed by the standards set by the Ontario Energy Board (OEB), even if the message to the public is that the OEB will maintain control over those rates. If control means having the highest electricity rates in this country, that is of no comfort to those already struggling on low and fixed incomes.
This government has to make tough decisions in addressing key issues such as transportation. However, to begin the sale of Hydro One at this time is a tricky proposition. Federal politicians are currently promising billions to win public favour. Why not delay the IPO until after the federal election and seek in the meantime to secure some of those billions for infrastructure?