IN THE KNOW
Those in the inner circle contradict mayor’s denial of Hydro sale option,
Mayor John Tory and his top aides were briefed last spring about a provincial rate change that would squeeze more profits from a sale of a minority stake of city-owned Toronto Hydro.
Joe Pennachetti, the recently retired city manager, confirmed that on April 27 he walked Tory, his chief of staff, Chris Eby, and principal secretary, Vic Gupta, through the changes during a routine morning meeting. The Star obtained an email about the briefing through Ontario’s freedom of information law.
Pennachetti said Friday he believes he alerted them that the Ontario budget reduced the tax on the sale of more than 10 per cent of a municipal utility, from 33 per cent of the sale price to 22 per cent. But he also warned that city council has in the past rejected any privatization of Toronto Hydro.
“There is always the question of how are we going to fund transit. Monetization of assets — like the province did (with Hydro One) — is always an option,” Pennachetti said, adding they had no “serious” conversation about bringing a privatization proposal to city council.
Toronto Hydro would need council permission to take concrete steps toward privatization.
However, the utility could study a partial sale as a possible remedy to its “enormous state-of-good-repair backlog” and the limit on how much debt it can accrue, Pennachetti added.
The Star on Friday quoted sources saying Toronto Hydro executives, and Tory’s senior staff and advisers, have had behind-the-scenes discussions about the possible sale of a minority stake in the electricity distribution system.
An energy finance expert estimated that the sale of just under half of the utility could yield $1.5 billion for transit expansion, social housing repairs.
One source said Friday there have also been discussions about a possible partial sale of the city-owned Toronto Parking Authority, which has more than 17,000 on-street parking spaces and 160 Green P parking lots. Toronto Hydro had no comment on possible sale preparations. Tory spokeswoman Amanda Galbraith strongly denied the story, even as the Globe and Mail quoted its sources as confirming privatization discussions.
The mayor himself told 680 News: “There is nothing on the table, nothing in front of me, nothing about to be in front of the city council or me on the subject of Toronto Hydro.”
Tory did not say if city staff or Hy- dro staff had such discussions, or rule out having the debate in future.
During the 2014 mayoral campaign, Tory criticized rival Karen Stintz’s hydro-privatization pledge, cited as a source of funding for a downtown relief subway line, as “sounding like a fire sale.”
The backdrop for privatization talk is $23 billion in unfunded projects planned by the city.
That doesn’t include the $2.7-billion tab for Tory’s SmartTrack transit plan, which he says will be funded by a borrowing scheme untested on such a big project.
City manager Peter Wallace’s proposed 2016 proposed budget includes “asset sales” under possible future ways to fund capital needs.