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Hydro_not_for_sale

Feature Article April 24

Feature Article April 24, 2002

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Hydro One not for sale at least for nowby David BrisonThe Ontario governments plan to sell off Hydro One, the provinces electrical transmission system, in June, hit an unexpected roadblock last week. Mr. Justice Arthur Gans of the Ontario Superior Court ruled that the government couldnt peddle the facility under the existing 1998 legislation.

Two unions brought the case before the Court: the Canadian Union of Public Employees (CUPE) and the Communications, Energy, and Paperworkers Union of Canada (CEP). Lawyer Steven Shrybman, who owns a house in Brooke Valley near Maberly, successfully argued the case on behalf of the two unions.

The governments decision to sell off the system for transporting electricity around the province, often called the grid, was one of the topics for discussion at a meeting held in Arden in March. MPP Leona Dombrowsky told that gathering that her party was not opposed to breaking up of Ontario Hydros 90-year monopoly on the generation of power. However, the liberals dont see any reason to put the transmission lines, poles, and transmission stations in private hands.

Many of the participants at the Arden meeting had been visited by sales representatives for retailing firms, who were selling electricity contracts which will go into effect on May 1 of this year. These visits alerted many to the upcoming changes in the electricity game, and brought them into sharp focus. Leona Dombrowskys presentation and the ensuing discussion seemed to leave the audience firmly opposed to the sale of Hydro One.

The sale of electricity generated by Ontario Power Generation (OPG) and other power generating firms will still begin on May 1. That wont be affected by the court ruling on Hydro One.

The move to break up the old Ontario Hydro and put the sale and generation of electricity on the open market was supported by a broad range of strange ideological bedfellows: environmental groups as well as big business advocates.

According to David Poch, a lawyer who lives in Maberly and specializes in environmental regulatory issues, environmental activists were, at their wits ends. Ontario Hydro was a horror. It could not be regulated. Their priorities were nuclear generation and then coal neither environmentally friendly. We [the environmental groups he works with and for] thought that any change in the status quo was better than continuing the old monopoly. The idea was that we could get new rules and we then might get some nicer, cleaner ways, like wind, to generate electricity.

Paul McKay, who lives on Desert Lake near Westport, has studied Ontario Hydro for a number of years and written a book on Hydro: The Electric Empire. He says that behind the thinking of many people who ordinarily would not have supported privatization was the idea that successive governments (liberal, conservative, and NDP) have artificially kept the price of electricity below what it actually cost to produce it. The hope was that if Ontario Hydro was broken up, people might look for other sources of power, or use less - that is, if they knew what they were actually paying for it. Instead, they were paying a hidden cost when the electricity deficit became part of the accumulated government debt.

There were a number of big business advocates, who on ideological grounds wanted free market competition, and were less concerned about environmental issues or at least thought those would sort themselves out within a free market framework.

Although breaking up the old Ontario Hydro had broad support from a number of groups, it is hard to find any support for the decision to sell Hydro One -- announced by the conservative government last December. That decision came as a surprise to many people. The Harris government hasnt presented a fact-based case for selling Hydro One. In fact it hasnt given any case, says Paul McKay. It is basically a bad idea. Hydro One is the old part of Hydro that worked. It will still be a monopoly, but will now have to make a profit. It is an ideologically driven idea that makes no sense. The only people that it will benefit are the financial people who get commissions for arranging the sale. David Poch estimates that the cost to the government for commissions to arrange the sale will be in excess of $100 million.

Paul McKay and David Poch both think that the sale of Hydro One, if it were to take place, would result in higher prices for electricity. Hydro One has for three years been instructed by the government to request less than the maximum return on their investment, says Poch. Any new buyer would want a much higher rate of return on their investment.

The next step in the ongoing story of the sale of Hydro One is up to the government. Premier Eves has been trying to distance himself from some of the policies and practices of the Harris administration, and present a kinder, gentler face to educators and government workers (amongst others). However, he has said that he will go forward on the Sale of Hydro One.

That was before the recent court ruling. The court decision can be appealed, or Eves and his advisors can decide to rewrite the legislation. The appeal would take time and any rewritten legislation would be debated in the house, as both the NDP and the Liberals are opposed.

Many are calling for the conservatives to take the sale of Hydro One to the voters in the next election and secure a mandate for what is the biggest privatization, at an estimated sales value of $5 billion, in Ontarios history. Evelyn Izzard, who organized the Arden meeting and has kept informed on the issues, is one of that group. Thank goodness for those unions. The court decision will allow the people of Ontario to speak out and have a voice.

With the participation of the Government of Canada