Go slow on pri­va­ti­za­tion

Toronto Star - - AMERICA VOTES -

The peren­nial push to pri­va­tize Toronto Hydro, the pub­licly owned power provider, ap­pears to be mak­ing un­prece­dented progress. But as the stars align for the sell-off, or per­haps more ac­cu­rately, are en­gi­neered into align­ment, the city should pro­ceed with cau­tion.

The Star re­vealed ear­lier this year that some of Mayor John Tory’s se­nior staff and ad­vis­ers had long been work­ing to­ward a par­tial sale of the util­ity, which could bring in up to $1.5 bil­lion for the cash-strapped mu­nic­i­pal­ity.

Last month, Toronto Hydro hired two for­mer se­nior Tory ad­vis­ers to lobby coun­cil to con­sider a sell-off. And last week, Cal­gar­y­based en­ergy gi­ant En­bridge Inc. hired an­other for­mer Tory op­er­a­tive to pitch its pur­chase of part of the en­ergy provider.

Mean­while, pol­icy-mak­ers sym­pa­thetic to the sale have been chip­ping away at the tra­di­tional ar­gu­ments against. One was that the prov­ince would gob­ble up much of the money through a long-stand­ing trans­fer tax meant to dis­cour­age the pri­va­ti­za­tion of pub­lic as­sets. Pre­mier Kath­leen Wynne, per­haps with a po­ten­tial hydro sale in mind, low­ered the levy sig­nif­i­cantly in her govern­ment’s last bud­get.

Now, an­other anti-pri­va­ti­za­tion ar­gu­ment looks ready to crum­ble. It has never been clear that the ben­e­fits of a one-time pay­off would out­weigh the sac­ri­fice of an­nual div­i­dends that flow to the city — a rev­enue source that has pumped al­most $210 mil­lion into Toronto’s cof­fers since 2010. But Toronto Hydro’s board of di­rec­tors is now look­ing at end­ing the sub­sidy on the grounds that it needs the money to up­date the city’s di­lap­i­dated power grid. (It may or may not have the au­thor­ity to do this.) By with­draw­ing the pay­out, the util­ity would sig­nif­i­cantly weaken the case against pri­va­ti­za­tion.

The trou­ble is the ap­pear­ance that paving the way to pri­va­ti­za­tion is what this is all about, rather than, say, do­ing what’s best for the city. Toronto Hydro re­cently re­ceived $2.25 bil­lion ear­marked for cap­i­tal spend­ing from the On­tario En­ergy Board, a boost that has re­port­edly con­trib­uted to a con­sid­er­able hike in prof­its. It’s not at all clear that the div­i­dend is needed to cover the costs of a grid up­date. Need­less to say, the tim­ing is rather sus­pi­cious.

Pub­lic of­fi­cials should be fa­cil­i­tat­ing, not ma­nip­u­lat­ing, the de­bate over pri­va­ti­za­tion. Be­sides the fi­nan­cial con­sid­er­a­tions, the sell-off of any pub­lic util­ity raises ques­tions of how best to pro­tect the pub­lic good.

Toronto Hydro’s 747,000 cus­tomers de­serve as­sur­ance that they won’t suf­fer un­due ef­fect from a sale, es­pe­cially if it’s to a pri­vate sec­tor op­er­a­tor such as En­bridge. On­go­ing green ini­tia­tives and con­ser­va­tion ef­forts have to be sup­ported and the city’s say in key de­ci­sions at the util­ity will need pro­tec­tion. The re­cent his­tory of par­tial pri­va­ti­za­tion in On­tario — from eHealth to ORNGE — should be read as a cau­tion­ary tale.

The al­lure of a sell-off to those work­ing to­ward it is clear. Pre­mier Wynne may well hope a sale would pro­vide po­lit­i­cal cover for her govern­ment’s own un­pop­u­lar pri­va­ti­za­tion of Hydro One, not to men­tion a big cash in­fu­sion in the lead-up to the elec­tion. Tory, who has promised not to raise prop­erty taxes and has been re­luc­tant to talk about other rev­enue tools, is surely en­ticed by what he sees as a more po­lit­i­cally palat­able, even if one-time, source of funds. En­bridge is no doubt ea­ger to en­ter a po­ten­tially lu­cra­tive new mar­ket.

But none of that has much to do with whether sell­ing part of this im­por­tant pub­lic as­set would, on bal­ance, be in the best in­ter­ests of Toron­to­ni­ans. The prom­ise of short-term ben­e­fits, whether to our cash-strapped city or to par­tic­u­lar politi­cians, must be weighed against the long-term costs. Sell­ing part of Toronto Hydro may be a wise move. But as long as of­fi­cials con­tinue to ma­nip­u­late the de­bate, the util­ity’s true own­ers won’t be able to de­cide.

Of­fi­cials must re­frain from ma­nip­u­lat­ing the de­bate

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