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Hydro One privatization has water and trade implications

Hydro privatization

The Ontario government is planning to privatize the publicly-owned electricity utility Hydro One.

The Globe and Mail reports, “Hydro One controls nearly all of Ontario’s transmission lines, and also serves as the local distribution company for 1.4 million households. …Premier Kathleen Wynne plans to sell 60 per cent of Hydro One on the stock market, in several increments. …The Liberals believe they can raise $9-billion from the privatization. Of that, $5-billion will pay down debt in the electricity sector while $4-billion will be used to build new transit lines.”

The Canadian Union of Public Employees (CUPE) Ontario, the National Union of Public and General Employees (NUPGE), the Ontario New Democratic Party (ONDP) and many others oppose this privatization. Rabble.ca has reported, “Peter Tabuns, MPP for Toronto-Danforth and the ONDP Critic for Energy, argues that the 60 per cent sell-off will harm rate-payers. …He says the sale will likely attract some of the biggest multinational energy players around and they don’t play nice with regulation that’s against their bottom line. …Along these same lines, Tabuns thinks that once Hydro One is largely out of public hands, it will be that much more difficult to develop a more sustainable electricity grid.”

Hydro privatization could also contribute to the privatization of water and wastewater services.

Queen’s Park Briefing reports, “In a bit of a sweetener for local electricity distribution companies [LDCs], [Ontario Energy minister Bob] Chiarelli said legislation will also propose to let the LDCs expand their businesses beyond hydro into ‘non-utility activities’. In similar cases, he said, utilities had diversified into water and wastewater services, and he christened the change a ‘tremendous opportunity’. ‘As we have seen in jurisdictions the world over, diversifying the lines of business a utility can participate in can bring about significant value, lower costs structures and pay sizeable dividends for shareholders’, Chiarelli said.”

Transnational corporations that sell both water and electricity services that could conceivably be interested in this include Suez S.A., Veolia Environnement S.A. and Epcor Utilities Inc.

And hydro privatization could have trade implications too.

Lawyer Steven Shrybman has argued, “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.” He notes, “In respect of transmission and distribution services, such measures [that could be challenged for offending investor rights] could include a mandatory obligation to connect renewable energy generators, to prioritize interconnections with other provinces rather than the United States, to conduct environmental assessments for new facilities, or to protect habitat in citing or maintaining those facilities.”

James Laxer recently commented, “For the past 30 years, governments on both sides of the Atlantic have been selling off electric power, telephone, railway and water and sewage systems to the private sector. …The number one privatizer, of course, was Margaret Thatcher, whose British government enriched a whole new host of capitalists through privatization. It’s not surprising that polls show that a large majority of people in Britain, including Conservative supporters, favour the re-nationalization of energy and railway companies. They are disgusted at paying so much for such poor service.”

Similarly a recent poll in Ontario found that 60 per cent of respondents disapprove of selling off the majority of Hydro One to the private sector. 77 per cent believe that privatization will increase electricity prices.

The Ontario government plans to sell 15 per cent of Hydro One within the year.

The Council of Canadians calls on the Ontario government to rescind these plans and to commit to electricity and water as public services.

For more on the CUPE Ontario campaign to stop the privatization of Hydro One, please click here.