|
|
|
Update:
Our Latest Forum Schedule
|
FREE
Email
Newsletter
Monthly
Magazine
Member Of
Download
Our
Issues
|
EDITORIAL
Ontario Government Listens To People, Stops Sale Of Hydro One
By Tania Henvey
Picture yourself buying a home. The vendor is asking an outrageous amount of money, but because it is the largest house on the block, you are willing to have a look since it seems to be a good investment. After you have been given the tour and the agent has answered all of your questions, you are ready to make an offer. But, then the vendor explains that there are a few stipulations. You can add your name to the mailbox and park your car in the driveway, but the vendor still wants to have full usage of the house. When you object, he thinks you are "unreasonable". You pass on the offer, telling the vendor that he can keep his property on 483 Bay Street, with a nickname in the area of "Hydro One".
Recent reports have said that Ontario Premier Ernie Eves had three buyers who were interested in purchasing 49 per cent of the utility, but decided against it when they were told that they wouldn't have any control. The bottom line was that the government wanted someone to put up the $2.5 billion to pay for just under half of the company, but didn't want to hand over any of the rights to run it. Because of this, the potential buyers were referred to as "unreasonable".
When Mike Harris originally announced the sale of the entire company in December 2001, consumers disapproved. When a court ruling halted the sale in April 2002, the government had to renege on its statement, offering up only 49 per cent of the deal.
Scrapping the sale of Hydro One has been placed on the shoulders of Ontario's taxpayers - apparently it is what Ontarians wanted. I guess the court case and public outcry from 2001 and 2002 gave it away a few weeks ago. Was it that obvious? Or did the government - which is supposed to represent the people - finally decide, 13 months later, that the public was right?
Now the damage has been done to the electricity market in the province and investors are turned off. No one wants to put money into a fluctuating market (or government) that was to thrive on deregulation, started drowning in it but was saved by a capped knight whose fees will end up costing billions more in the long run.
According to Eves, the decision to keep sole control of Hydro One was made primarily to protect consumers. When elected, he made goals for Hydro One - the most important being the protection of those who use electricity. He also wants to make the utility more efficient (without having to pay the high salaries that caused a public outcry last summer) and rebuild it. Finally, in November 2002, he announced (with the bill to cap rates) that the government would begin paying down the debt of the corporation. How nice of him to offer to pay off his government's debt (most likely with our tax dollars).
In reality the government had no choice, because as a January 21st article in the Globe and Mail noted, "Mr. Eves botched the electricity file so badly that Hydro One went from the hottest asset on the province's book to tarnished goods in less than a year."
Howard Hampton, leader of the Ontario NDP government, campaigned against the sale and now he has the right to say, "I told you so." He believes Hydro One will be sold eventually, perhaps after the next election. He has been right so far and who knows which way the government will turn next.
He is not the only opposition critic noting that the "flip-flop" attitude of the Ontario government cannot be trusted. Even those on Bay Street, Toronto's major trading district, have said that they are unhappy with what the Tories have done with electricity in the province. When investors want nothing to do with a company, that is the first sign that something is seriously wrong.
Paul Williamson of the Canadian Taxpayers' Federation noted that the rate cap was the first thing that made investors weary. When the province decided not to sell Hydro One, investors were sold... on anything but Ontario.
So is it an election ploy like some say, or was it actually an attempt to salvage what has happened to the electricity market in Ontario? Eves was a hero to some when he capped the rates, stopping soaring electricity prices for consumers. In reality, it was a short-term solution to a problem that generations of Ontarians will be paying for.
This was the final piece of hay in the stack - the Ontario government has finally found the needle it needs, clearing itself of all burdens that might hinder its chance to win the next election.
The government needed to seriously ask itself: why would anyone put money into a company they have absolutely no control over? What would happen if the new buyer had wanted to raise the rates but the government didn't? Who would win the battle - the one with 51 per cent of the company? Obviously!
I guess the government was hoping a silent partner would arise - one that had deep pockets and knew how to keep his mouth shut.
In any case, Mr. Eves has earned a wonderful new nickname - "flip-flop". That must be why the joke around Queen's Park for months was the campaign slogan: "Ernie Eves - strong leadership, if that's OK with you." ET
|
|
|
|
|
LATEST ISSUE
