By MPP Toby Barrett
This month brought us another unaffordable electricity increase as a result of failed electricity policies. On average, we will now pay an additional $53 annually, on top of the $68 price hike last spring.
This month also saw the provincial government’s Initial Public Offering of 15 per cent of Hydro One at $20.50 a share.
And also this month, Ontario’s Financial Accountability Officer (FAO) released a report confirming what Ontario’s Opposition has been saying all along – that the Hydro One fire sale is a bad deal for electricity users.
As Opposition Leader Patrick Brown explained during Question Period: “It makes no sense to sell an asset that will only net $1.4 billion while you lose an asset that brings in $700 million each and every year.”
According to an Ontario Energy Association poll, almost 80 per cent of residents believe the fire sale will raise their hydro bills. When you combine rising hydro bills with the inevitable tax increases this government will impose to make up for revenue lost, people will suffer a double hit.
The Official Opposition has been doing everything in its power to stop this sell-off, bringing up the topic on an almost-daily basis and asking the government to reconsider.
During the 2015 budget, Ontario announced its intention to sell up to 60 per cent of Hydro One. The province would sell 15 per cent in 2015-16 and the balance in subsequent sales.
By selling 15 per cent of Hydro One, Ontario’s net debt would initially be reduced between $2.4 and $3.9 billion. However, in his report, Ontario’s Financial Accountability Officer, warns net debt would eventually increase as a result of the partial sale as the cost of forgone revenues from Hydro One begins to exceed the initial benefits.
Hydro One is wholly owned by the Province of Ontario as an electricity transmission and distribution company. In 2014, the company operated 97 per cent of Ontario’s transmission capacity, and the largest distribution system in Ontario spanning 75 per cent of the province.
As sole owner, the province currently has claim to all of the net income of Hydro One – approximately $750 million last year. Following the sale of 15 per cent of the company, the province would have claim to only 85 per cent of this net income. The FAO estimates the sale of 15 per cent of Hydro One would result in a reduction of approximately $50 million in income.
Each additional sale of ownership would increase the amount of foregone income.
The FAO does recognize there may be potential for improvement to Hydro One’s net income as a result of changes and the resulting influence of new owners.
The fact remains, Hydro One is one of the worst performing electricity distributors in North America, and spends an awful lot of money to maintain their track record.
Even among electricity distributors in Ontario, Hydro One, according to the National Post, performed so poorly that is was considered an outlier, along with Toronto Hydro. Its new CEO makes $4 million a year and, on average, wages are 10 per cent above comparable entities.
There is hope locally that the new owners may see the way clear to complete the Niagara transmission corridor through Caledonia, shut down by protestors for the past nine years.