Hydro Ottawa’s fat-city dividend makes no sense

The city has hundreds of thousands of dollars in extra-superfree bonus money to spend on green projects, which city council’s environment committee will dole out on Tuesday.

Well, OK, the money’s not free because there’s no such thing. It comes from Hydro Ottawa customers, from the “dividend” the company gives the city government every year even as it borrows hundreds of millions of dollars for expansions and upgrades.

The dividend was $20.6 million last year and this year it’ll be even higher, about $1.9 million more than the city’s budgeted, which mostly means good news for the city’s pothole-repair budget.

We’re two paragraphs in and maybe your head is spinning a bit. That’s because none of this makes sense.

Once upon a time, shortly after amalgamation in 2001, Ottawa city council had to decide what to do with its newly merged electricity-delivery company, Hydro Ottawa. Bob Chiarelli, the mayor at the time, set things up so that the power-delivery company would be an officially private corporation that happened to be solely owned by the city government, and would send the city a chunk of its profits every year.

Because the province closely regulates how companies like Hydro Ottawa operate and what they can charge, annual profits are virtually guaranteed unless the city hires actual criminals to run it.

Hydro Ottawa pays the city an annual dividend and owes hundreds of millions of dollars in debt. Its last annual report covering 2016 put its long-term debt at $773 million ($175 million of which was freshly borrowed), plus $69 million it owed in shortterm bank loans.

There’s no earthly reason for a company to be spinning out tens of millions of dollars in dividends while borrowing money it’ll have to pay back with interest. Yet Ottawa city council demands it and Hydro Ottawa does as its owner says.

At budget time in December, city council decided to treat any surplus on its own surplus as extra-super-free bonus money, adopting a policy to spend twothirds of it on road repairs and one-third on these efforts to cut pollution and energy use.

Why should electricity bills pay for fixing potholes? Well, potholes were on Mayor Jim Watson’s mind last fall when city council decided how to spend the extra-special bonus dividend. It could just as easily have been libraries or police officers or redlight cameras. But this year, it’s potholes.

The $633,000 left over for reducing energy use and pollution is to be spread among eight projects. The single biggest line item is $120,000 for one fast charging station for electric cars, location to be determined.

Another project will spend $100,000 to take a rural city building off propane heat and put it on either heat pumps or biomass (that is, pellets made from wood). A third will spend $100,000 to replace old wood heaters in people’s homes with better ones.

Two projects worth $155,000 combined will put in new lights — lower power, higher quality, it says here — at city hall and the Jim Durrell recreation centre near Bank and Walkley.

There’s a dash of woo-wooery, like a $17,500 web page that shows Ottawa’s greenhouse-gas emissions data. They call it a “dashboard,” which suggests live updates, but it uses data from 2014 and 2015. It’s colourful and twirly, at least. Last year’s budget also paid more than $100,000 for sessions to convince socialhousing landlords to do energyefficiency retrofits and tenants in the city’s own buildings to turn down the heat.

But the list is mostly physical improvements that should pay for themselves within a few years and that the city should have been doing without hoping Hydro Ottawa would pay for them. Solar panels for water heaters at the Plant Recreation Centre. Thermostats so space heaters in the entryways of city buildings don’t go 24/7 all winter. Duh.

This is short-term thinking layered on top of short-term thinking: A city government that overcharges for electricity so it can fix the roads and skimps on efficiency and pollution control unless it can pay for them with found money.

The new Progressive Conservative government’s electricity policy includes a plan for the provincial power-delivery utility, Hydro One, among whose jobs is to delivery electricity to about 1.3 million mostly rural customers — the same thing Hydro Ottawa does in the city here. The Tories say they’ll take the profits Hydro One sends the provincial treasury, hundreds of millions of dollars a year, and use that money to cut bills.

Effectively, they’ll turn Hydro One into a non-profit company as far as the provincial government’s concerned.

If that’s not just vote-buying — if there’s an actual principle at work — there’s no good reason not to legislate the same for city utilities like Hydro Ottawa. Make electricity bills cover electricity costs. Run it like the water department, not as a profit centre that lets politicians spend money they don’t have to account for.