The Council of Canadians is opposed to the sale of Toronto Hydro now being considered by Mayor John Tory and backed by Ontario Premier Kathleen Wynne.
The Toronto Hydro website notes, “Toronto Hydro-Electric System Limited owns and operates an electricity distribution system which delivers electricity to approximately 740,000 customers located in the City of Toronto. It is the largest municipal electricity distribution company in Canada and distributes approximately 18% of the electricity consumed in Ontario. Toronto Hydro Energy Services Inc. provides street lighting services to the City of Toronto.”
In January, the Toronto Star reported, “Behind-the-scenes work is ongoing for the possible sale of a minority stake in city-owned Toronto Hydro to help fund the city’s massive capital needs. The payoff could be huge to fund Toronto transit, social housing and other infrastructure, as well as a desperately needed cash infusion for a utility struggling with its own infrastructure demands and rising debt levels.”
One possible scenario being considered could be the sale of a 49 per cent minority stake in the utility, which would reduce the annual dividend (which was just over $60 million in 2014) and generate a one-time windfall of about $1 billion minus a 22 per cent provincial departure tax.
Last month, The Globe and Mail reported, “Toronto would be on the hook for a hefty provincial tax bill if city council moves forward with a plan to privatize Toronto Hydro. Under current rules, any municipality that wants to sell more than 10 per cent of a local distribution company must pay a ‘departure tax’ to the province. The tax could be around $200-million in the case of Toronto Hydro.”
But the provincial government appears to support the sale and it has been suggested that a deal could be in the works to reduce the city’s tax payment to the province.
That news report adds, “One Liberal source suggested the province believes that privatizing Toronto Hydro to raise money for transit, housing and other infrastructure – as Tory is contemplating – is a good idea and Queen’s Park is interested in helping make it happen. There have so far been no formal discussions between the city and the province over taxes, the source said, but those will likely happen.” And just two days ago, the Toronto Star noted, “Wynne’s government will be all ears if Tory asks for tax concessions to expedite the sale of Toronto Hydro.”
The Council of Canadians and our Ontario and Toronto-based allies oppose the sale of Toronto Hydro.
CUPE Ontario president Fred Hahn says, “The reality is, we heard the same lines coming from our Premier before she began the sell-off our provincial system and we know what a disaster that has proven to be. …People should not be fooled by the pitch to sell only partial shares in Toronto Hydro. Once that door is open there will always be pressure to sell-off more and it will be a lot harder to stop once the people of Toronto no longer own it in its entirety. …The people of Toronto are not dumb – we know it is not good policy to burn the furniture to heat the house.”
Councillor Gord Perks is also opposed to the sale of Toronto Hydro and says, “It’s a fight that the mayor would be unwise to take on. Effectively, to solve today’s problems you are hurting tomorrow’s taxpayers. Why would you shift control of electricity and the profits from it from public to private hands?”
Significantly, an Environics poll suggests that about 70 per cent of people in Toronto oppose the possible sell-off of Toronto Hydro.
In order for the sale to happen, a majority of the 45-member Toronto City Council would have to agree to it.
It is notable though that the Toronto mayor has taken an interest in appointments of new members to the Toronto Hydro board, which has recently included David McFadden, chair of the pro-privatization Ontario Energy Association.
In 2010, the Council of Canadians participated in the Ontario Electricity Coalition campaign to push back on an earlier attempt to sell-off part of Toronto Hydro.
We are also opposed to the privatization of the provincial electricity transmission and distribution utility Hydro One and our Peterborough chapter has been campaigning against the possible sale of the city-owned utility Peterborough Distribution Inc. to Hydro One. And we oppose so-called “asset recycling” schemes that involve selling public assets to spend on new public assets.
