Hy­dro One pay just a dis­trac­tion, ex­perts say

Elec­tric­ity ‘mess’

The Sun Times (Owen Sound) - - FORUM - TOM BLACKWELL

TORONTO • On­tario’s Pro­gres­sive Con­ser­va­tive leader stood in the rain Tues­day and protested at the doorstep of an un­likely Tory vil­lain — a big cor­po­rate head­quar­ters.

Sur­rounded by sign-wield­ing sup­port­ers, Doug Ford con­demned Hy­dro One and the steep salaries paid to bosses and board mem­bers of the re­cently pri­va­tized elec­tri­cal util­ity.

It was just his lat­est take on a re­cur­ring cam­paign theme. Al­most daily, Ford in­vokes the “$6-mil­lion man” — Hy­dro One chief ex­ec­u­tive Mayo Sch­midt — and con­trasts Sch­midt’s an­nual in­come to the strug­gles of or­di­nary On­tar­i­ans and their hefty power bills.

That com­par­i­son is cer­tainly stark. But how much do those now-in­fa­mous pay­cheques re­ally have to do with the mis­man­age­ment and scan­dal that have be­set the prov­ince’s elec­tric­ity sys­tem un­der Lib­eral rule?

Well, ac­tu­ally, al­most noth­ing, say en­ergy ex­perts.

Gen­er­at­ing elec­tric­ity in On­tario costs about $21 bil­lion a year, dwarf­ing the salaries not only of Hy­dro One — which dis­trib­utes the power — but of ev­ery top ex­ec­u­tive in the sec­tor com­bined, notes Tom Adams, a prom­i­nent en­ergy con­sul­tant,

“The elec­tric­ity sys­tem is a mess — it has to be recon­cep­tu­al­ized and re­struc­tured from the ground up,” says Adams. “I’m just re­ally con­cerned about the politi­cians not think­ing care­fully about this … The dem­a­goguery has got­ten out of hand.”

As a cam­paign tac­tic, how­ever, Ford’s Hy­dro One salary fix­a­tion ap­pears a win­ner, a straight­for­ward sym­bol of broader con­tro­ver­sies that res­onates with vot­ers an­gered by hy­dro in­fla­tion.

Among the TV-news-like videos posted by the Tories on their Face­book page, those high­light­ing re­cent raises for Hy­dro One ex­ec­u­tives — and this week its board mem­bers — far out­strip oth­ers in pop­u­lar­ity, one of them viewed well over 700,000 times.

The PCs’ polling, and cam­paign ex­pe­ri­ence, con­firms that the salary an­gle strikes a chord, said a se­nior cam­paign of­fi­cial, speak­ing on con­di­tion of anonymity.

The of­fi­cial in­sisted the is­sue is not merely sym­bolic, but symp­to­matic of a Lib­eral gov­ern­ment out of touch with the ag­gra­va­tion their poli­cies have gen­er­ated.

“This is def­i­nitely the No. 1 is­sue with vot­ers,” said the PC or­ga­nizer. “Peo­ple are just feel­ing left be­hind, they’re feel­ing left be­hind and that ev­ery­one is cash­ing in at their ex­pense.”

On­tario’s elec­tri­cal sys­tem un­de­ni­ably is and should be a ma­jor is­sue lead­ing up to the June 7 elec­tion.

Hy­dro rates rose at sev­eral times the rate of in­fla­tion in the years after the Lib­er­als came to power in 2003, first un­der Dal­ton McGuinty, then cur­rent Premier Kath­leen Wynne.

The prov­ince’s au­di­tor gen­eral has es­ti­mated that On­tar­i­ans paid a mind-bog­gling $37 bil­lion too much for elec­tric­ity be­tween 2006 and 2014, partly be­cause of overly gen­er­ous con­tracts for re­new­able en­ergy and poor plan­ning.

A plan to re­duce hy­dro bills by 25 per cent last year, funded with bor­rowed money, will it­self cost $21 bil­lion in in­ter­est, ac­cord­ing to On­tario’s Fi­nan­cial Ac­count­abil­ity Of­fice.

Hy­dro, says Adams, has been a “pub­lic pol­icy dis­as­ter on an epic scale.”

But both the Con­ser­va­tives and NDP seem to have missed the point in ad­dress­ing the is­sue, an­a­lysts say.

Fir­ing Sch­midt, as Ford has pledged, “would do next-to-noth­ing to lower rates, while con­tin­u­ing a more than decade-long trend of grow­ing po­lit­i­cal in­ter­fer­ence in the sec­tor,” says Brady Yauch, an econ­o­mist with the free-mar­ke­to­ri­ented Con­sumer Pol­icy In­sti­tute.

Ford has also promised he would scrap overly ex­pen­sive en­ergy con­tracts wher­ever pos­si­ble, and re­duce con­sumer rates by a fur­ther 12 per cent, partly by us­ing div­i­dends paid by Hy­dro One.

But he would keep in­tact the Lib­er­als’ Fair Hy­dro Plan — the 25 per cent rate cut that un­til re­cently the Tories reg­u­larly blasted.

The NDP says it would buy back the 51-per-cent of Hy­dro One the gov­ern­ment sold, also us­ing those Hy­dro One div­i­dends. Com­bined with other mea­sures, it says it can achieve a 30 per cent rate cut.

Adams shakes his head at both par­ties’ poli­cies, say­ing those div­i­dends now ef­fec­tively sub­si­dize hy­dro rates by pay­ing off stranded elec­tri­cal debt.

“It seems kind of ob­vi­ous that you can’t spend a dol­lar twice,” he says.

Adams says the so­lu­tions should start with an­a­lyz­ing the state of cur­rent en­ergy con­tracts and get­ting out of over-priced deals where pos­si­ble, though he says that will not be as easy as some sug­gest.

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