The Financial Accountability Office of Ontario has detailed the cost of privatizing Hydro One in their latest report.
In 2015, the government of Ontario announced its intention to sell up to 60 per cent of Hydro One. In December 2017, the province completed its final sale of Hydro One shares, generating an estimated $9.2 billion in proceeds by selling 53 per cent of the utility.
The report says that there is short-term gain for Ontarians, due to the $9.2 billion that was generated through the sale, but long-term pain can be expected.
The positive fiscal impact from 2015-16 to 2017-18 results from the one-time gain from the sale of Hydro One. The negative ongoing fiscal impact, starting in 2018-19, mainly results from the Province’s lost share of 53 per cent of the annual net income from Hydro One and the end of payments by Hydro One to the Province of payments-in-lieu of taxes. This is only partly offset by the Province’s interest expense savings and Hydro One’s corporate tax payments to the Province.
The FAO notes that they developed an alternative financing scenario, in which the province would have issued traditional debt to fund an identical amount of infrastructure investment – rather than selling 53 per cent of Hydro one. The report states that provincial net debt will be higher as a result of the partial sale of Hydro One, starting in 2028 – 2029, when compared to their alternative financing scenario.
At Queen’s Park, Ontario NDP Leader Andrea Horwath is saying that Hydro One’s privatization was a ‘reckless’ move.
“The report by the FAO is a damning indictment of the privatization schemes rammed through by successive Conservative and Liberal governments. The sale of Hydro One will cost the people of Ontario nearly $300 million every year, and it will result in the province paying $1.8 billion more to build hydro infrastructure than it would have cost if Hydro One had remained in public hands,” she said.
Horwath adds that the additional money that was spent could have went into other services. She lists hospital overcrowding, education and lower hydro bills. Horwath says that the NDP have a plan to bring the utility back into public hands, if they get elected. A provincial election is set for early June.