What is the real Hydro One story?
No initiative taken by the Province during the past four years has been so misunderstood, nor so wilfully misrepresented as Ontario’s successful effort to convert a portion of its equity in Hydro One, and use that $9 billion to improve public transit in lieu of further borrowing. Let’s take the Hydro One arrangement apart and get at the truth.
- What exactly is Hydro One?
- Hydro One is a transportation company, a ‘common carrier,’ like a railway. It does not make or consume what it carries. It hauls (‘transmits’) a commodity – electricity – on a dedicated roadway (wires) from the manufacturer (power generators) to the distributor (firms like Alectra in Mississauga, also a private sector company) who sell it to the end user.
- Does Hydro One have anything to do with the retail price of electricity?
- To falsely assert that Hydro One affects the retail price of electricity is like saying the trucking company that hauls your groceries to the store sets their shelf price. Asserting that the CEO’s compensation package affects electricity rates is even more ridiculous. Electricity prices are set by the independent Ontario Energy Board.
- Did Ontario sell a priceless asset in Hydro One?
- No. Hydro One was one of the most troubled Ontario crown corporations three years ago. Hydro One is now well-managed. Using some of Ontario’s equity in the company will help get the traffic gridlock issue in our cities alleviated and paid for. Hydro One is now a much more valuable and better-run company than it was three years ago. The last such move to make a floundering public sector transportation company private was in the mid-1990s, when CN Rail was fully privatized. Today, CN Rail is North America’s best run railway, but the Canadian taxpayer derives no continuing benefit from its profit and dividend stream. Not so with Hydro One, from which the Ontario taxpayer will continue to receive dividends as the controlling shareholder.
- Did Ontario lose control of Hydro One?
- No. Ontario remains the controlling shareholder in Hydro One. No other shareholder may hold more than 10 percent of Hydro One’s shares. There are nearly 598 million Hydro One shares outstanding. Ontario retains nearly half of Hydro One’s equity. No credible scenario exists to ‘out-vote’ the Province.
- What about the salary of the Hydro One CEO?
- The move by the Hydro One to raise its management salaries in an election year was about as tone-deaf and dumb as a private company possibly can be. Never mind that Hydro One’s management team is compensated at about the transmission industry average. Never mind that those salaries will not affect electricity rates one cent. It was just dumb. Period.
- Where can I get more information?
- See http://www.bobdelaney.com/hydro-one/ on Bob’s MPP web site.