Selling Ontario Hydro

The Ontario provincial government announced last week that it was planning to sell 60% of Ontario Hydro. They anticipate earning approximately $9 billion from the sale. On the surface this may appear to be a good deal. The province is in debt, there are significant and expensive infrastructure  projects that need to be initiated if the province is not to fall even further behind and quite clearly there is not the public appetite to have their taxes increased. The province has assured us that because they are retaining 40% of Ontario Hydro, they will maintain control. The cost of electricity to the individual will not go up. It is the intention of the government that approximately $5 billion from the sale will go to paying down the provincial debt and the remaining funds will be used to support infrastructure programs. It sounds as if everyone will win - or at least not lose too much.

I suspect however, that the list of pros and cons in terms of the sale is a bit more complicated than that. 

(1) At present Ontario Hydro owes about $20 billion. Most of that debt was incurred when the province built a number of nuclear power plants in the 70s and 80s (CBC). Ontario Hydro makes about $900 million a year. That money is used to pay down the debt. When 60% of the corporation gets sold, the debt will remain the responsibility of the government. That is, the majority of the corporation that makes money to pay down the debt will be owned by private individuals. They will get that profit (or at least 60% of it) and we, the taxpayers will have to pay off the debt. Where will that money come from?

(2) While initially the Ontario Government will, as the majority shareholder, hold control of the corporation - one cannot assume that that the 60% private owners (corporations) will not join forces and insist upon changes to either the fee structure or the profit margins. Hydro will now be accountable to shareholders. It is unlikely that various public accountability institutions such as the Ontario Ombudsman Office will be allowed to have an active role in resolving issues between the corporation and the public.

(3) While provincial governments have seldom demonstrated the capacity to create and maintain a long term vision of how people in Ontario will produce and consume power, that is one of their jobs.  It will be so much harder to reform how we use and generate power when we do not own the company that needs to implement those policies. We will have to convince private shareholders to think of what is good for the public - not what is good for the bottom line. Good luck on that one.

Ontario's finances are not in good shape. A reasonably rapid infusion of new money is needed to both pay off some of the provincial debt and to invest in the future. Selling off a portion of Ontario Hydro may be the only way to do that. But Ontario Hydro is a publically owned corporation. With all of its faults (and they are extensive), that corporation could have been the vehicle by which the province could have driven into middle part of this century with a vision of how, for example, to replace our aging nuclear power plants.

Who is going to provide the leadership?