Keeping you informed about the issues
April 21st, 2015
Privatizing
A BIG MISTAKE
Premiere Kathleen Wynne has announced that the Ontario government is privatizing 60 % of Hydro One.
It was a bad idea in 2001 and it’s a bad idea now. Giving up forever, all future revenue (now $1 billion a year),
for a one-time cash payment for selling off Hydro One is not a very wise thing to do. There is no such thing as
free money. There are permanent consequences from privatization.
Hydro One builds and operates the electricity grid in Ontario. Its transmission lines deliver electricity to cities
and towns across Ontario to local distribution utilities like Toronto Hydro.
Here are the Final Recommendations from the ED Clark Report:
1. The Province should proceed immediately with a sale or merger
of its interest in Hydro One Brampton Networks Inc. to or with
Enersource Corporation, Power Stream Holdings Inc. and Horizon Holdings Inc., intended to catalyze consolidation on the
Greater Toronto and Hamilton Area and to strengthen competition on the distribution sector by increasing the number of
LDCs with the capacity to drive further consolidation.
2. The Province should amend the transfer tax rules and departure
tax rules that apply when municipal electricity utilities leave the
payment-in-lieu of taxes regime both on a time-limited basis
and implement these changes as quickly as possible.
(This could lead to the potential sale of Toronto Hydro).
I really pray this works!
3. The Province should proceed with a partial sale portion of its interest in Hydro One as an integrated entity,
including both the transmission and distribution businesses, to create a growth-oriented company centered
in Ontario.
4. The partial sale of the Province’s interest in Hydro One should be by way of an Initial Public Offering
(IPO) so that the company will be widely held, predominantly by Canadians.
5. The government should indicate its intention to retain its remaining shares after selling down 40% and the
balance should be widely held with no other individual shareholder having more than a 10% holding.
6. Hydro One should be required to maintain its head office and substantially all of its management functions
in Ontario.
7. The mandate and powers of the Ontario Energy Board should be strengthened to ensure that changes in industry structure do not put upward pressure on rates.
8. Governance of Hydro One should be adjusted to meet the requirements for a widely-held public company,
and certain legislative and government regulatory and policy requirements that are applicable to government entities should be removed.
9. Governance of the company should be vested in its Board of Directors: all directors would be independent
with the requisite skills and board experience for an operation of the company’s size and owe a fiduciary
duty to the company.
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CUPE Local One
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April 21st, 2015
10. In order to ensure the Province has additional powers to protect both the public interest and its investment
through the company in Ontario’s transmission and distribution systems, Hydro One should not be allowed
to do any of the following:

sell all or substantially all of the Ontario = based transmission assets of the company;

sell all or substantially all of the Ontario-based distribution assets of the company; or

change the jurisdiction or incorporate of the company.
11. The Province, Hydro One management, and unions should finalize agreements on pensions and labour
costs in advance of the Hydro One IO to address issues raised by the Leech Report and the Ontario Energy
Board with respect to pensions and compensation.
CUPE Fighting the Sale
CUPE Local One opposes any sale or privatization of Hydro, we along with others that want to Keep Hydro
Public including CUPE Ontario and CUPE National have hired the law firm Sack GoldBlatt Mitchell (this is the
same law firm that helped stop the Hydro One privatization on 2003).
Local One, the Ontario Electricity Coalition partnered with CEP (now Unifor) and CUPE National fought to
stop the government from privatizing Hydro One and won a land mark decision. Judge Gans ruled on April
19th 2002, that the government did not have the legal right to sell it. Hydro One belonged to the people of
Ontario.
Initial reports indicate that there are reasonable grounds for arguing that the sale of securities, debt or other interests in Hydro One would be subject to challenge, on the following basis:
1.
the government has no lawful authority to use the proceeds from such a sale to fund transit infrastructure, as
it has declared its intention to do. Regardless of whether
the sale itself is lawful, if the government fails to pay
the net proceeds from any such sale to the Ontario Electricity Financial Corporation, it would be in breach of
the explicit requirements of the Electricity Act;
2.
the government’s professed reasons for authorizing a
privatization of Hydro One (in particular, in order to
fund transit infrastructure) are entirely extraneous purposes not authorized by the purposes of the Electricity
Act; and
3.
the exercise of a statutory discretion to privatize Hydro
One could be challenged on administrative law grounds
of unreasonableness or irrationality.
Even the Minister of Energy is
scratching his head over this
‘As well, there is a very serious concern with respect to the impacts of privatizing Hydro One, in light of
Canada’s obligations to foreign investors and service providers under international trade law. These may limit
the government’s future policy and regulatory options in respect of the electricity transmission and distribution
sectors’.
No Right to Sell
The question that needs to be asked and answered is, why now. It has not worked anywhere in the world and
cities are now buying back their power grids because the experiment has not worked…ANYWHERE. Politicians did not sell Ontario Hydro during the depths of the Great Depression or during the height of the Second
World War. Those economic times were far worse than what we face now. Those politicians wisely kept Hydro
to create jobs and to help the economy recover from those lean times. Now, it is critical that governments have
the levers of public ownership to curb global warming and institute real conservation programs.
Over the next several weeks the Local will be sending you information on how you can get involved and tell our
MPP’s that the sale of Hydro One is not what is best for the people of Ontario.
PRESIDENT: John Camilleri, VICE-PRESIDENT: Dave Philpott, RECORDING SECRETARY: David Carrington, TREASURER: Charlene Mueller
15 Gervais Drive Toronto ON M3C 1Y8 Phone: 416-968-2549 Fax: 416-968-6836 www.cupeone.com info@cupeone.com