By Matias de Dovitiis
With memories of the awful deal we got from the sale of Hwy 407 to a private Spanish firm still fresh in the minds of Ontarians, Premier Wynne is pushing ahead with the sale of part of Hydro One.
Needless to say that the proposal has not been well received.
For one, the company is in disrepute as it is. A recent Ombudsman’s report sheds light on some of the mismanagement that is taking place.
The Ombudsman report alleges that a billing system had been billing people the wrong amounts, sometimes for $1000’s of dollars.
It also noted that a very expensive “fix” failed to solve the situation.
It goes on to note that customers in the thousands were billed the wrong amounts, that little service was provided to them and staff at the company tried to cover up the issue.
The Conservative opposition is asking for an OPP investigation into the cover-up.
In comes the Liberal government with a plan to sell part of the company to private interests in order to raise cash for Transit investments.
Their argument is that in order to build transit, the only alternative left to them is to sell off Hydro One and use the profit for investments.
But there are too many things wrong with this deal, including the fact that in the future, if Hydro One is sold, the Ombudsman will not have the right to do investigations about this crown corporation.
Since we, Ontarians, will only own 40% of Hydro One, the company would no longer be under the scrutiny of any of the government’s watchdog agencies.
What we can expect then are higher electrical fees and poorer service.
The ONDP is now asking for a referendum on this, to allow for a real choice to be made by Ontarians on this issue.
What Editorials are saying about it:
The Toronto Star
Toronto Star’s View: Selling off most of Hydro One is a big risk for Ontario
… but there’s an enormous risk that this scheme will go off the rails. Private investors are bound to push for more control; if they don’t believe they can get it, they will be reluctant to pay top dollar for their share, reducing the government’s take from the sell-off. And regulatory agencies often dance to the tune of the industry they regulate even while being pledged to serve the public interest. April 17, 2015
The Globe and Mail
Where’s that $9-billion for Hydro One coming from – and where’s it going?
Overseen by a tough regulator, the synergy of public and private could be a very positive thing.
That’s why we support the plan to sell off most of Hydro One. What bothers us – and should bother you – is the wishful-thinking accounting being used to sell the deal. Up-front benefits abound but future costs, in terms of lost revenues, are not mentioned. April 19, 2015
The Toronto Sun
Hydro One fire sale a mistake
“We generally support bringing private sector discipline to bloated public sector entities such as Hydro One. That said, this proposed sale of Hydro One doesn’t make sense.
The Liberals expect to get $9 billion for 60% of the electricity grid.
They’ll take $5 billion of that to pay down the massive electricity debt, netting $4 billion from the sale for other uses — for a company that has $1 billion in annual revenues.” May 21, 2015
What is wrong with this deal?
The sale of Hydro One would net $9 billion according to the government, but it makes a profit of $1 billion a year. We are better off keeping the company. Over 20 years we would make twice as much profit from it.
As soon as the company is sold, the private interests behind the sale will push to have the price of electricity go up. If prices are bad now when there is no profit margin required, imagine it later.
The service will not be better. There are currently 8 government agencies (the Auditor, Ombudsman, etc.) that oversee Hydro One. This is in fact why we know that Hydro One is in trouble. After the sale, none of these agencies will have the ability to review what happens with Hydro One. This will be bad for all of us
The deal:
The government is proposing to sell of a 60% stake of Hydro One to private investors. The company is valuated at $13.5 billion to $15 billion. The government estimates to receive around $9 billion for the sale. It then plans to use the proceeds to pay off some of the public debt around electricity production and to use some of it to build public transit.
What the Legislative watchdogs are saying:
“The officers are concerned that while the government intends to eventually hold 40% of Hydro One over the long term, their ability to assess its value and quality of service among other matters, would be eliminated”
Source: Toronto Sun
The safety valve:
The government’s plan is to retain a controlling 40% of the company. They would do this by selling no more than 10% to any group, and by retaining controlling shares.
Hydro One Facts:
Hydro One is the largest electricity transmission and distribution company in
Ontario, with $22.6 billion in total assets.
Owns and operates substantially all of Ontario’s electricity transmission system, . accounting for about 97% of Ontario’s transmission capacity as measured by
revenues for the year 2014
Cumulative Smart Meters deployed: Over 1.4 million.
Number of vehicles/equipment in Fleet: Over 7,500.
Remote Communities Served: 21
Rural and Urban Distribution Customers: approximately 1.4 million
Full-time: 5,619 regular employees
Non-Regular: 2,237 employees (includes temporary, contract and part-time)
Pensioners and disabled & deferred members: 7,682
Source: Hydro One
Email us at info@downsviewadvocate.ca and tell us what you think about the
government’s plan to sell Hydro One.