Ford misled on Hydro One
Premier Doug Ford may not have outright lied this week about the cost of fulfilling his election promise to get rid of Hydro One CEO Mayo Schmidt.
But he certainly grossly misled taxpayers when he crowed that the payout to Schmidt for stepping down “was zero … absolutely zero.”
In fact, Schmidt is likely to end up with an amount closer to $9 million, mostly in stock options, not the mere $400,000 that Ford claimed he received as a retirement severance payment.
And that doesn’t include the $4.9 million that the 14 members of the Hydro One board who resigned, apparently under threat of having their contracts ripped up, reportedly stand to collect.
None of this lives up to Ford’s promises in Thursday’s Throne Speech to “rebuild trust between the people and their government.” Nor does cooking “up a deal behind closed doors,” as NDP Leader Andrea Horwath put it, create the transparency expected of any democratic government.
There are many other costs to Ford’s actions, other than the financial payouts to the departing CEO and board members.
For one, shares in Hydro One — still owned 47 per cent by Ontario taxpayers — closed down more than 3 per cent on Thursday as the markets delivered their verdict on the government’s meddling in a supposedly privatized corporation.
That will lower the dividend paid to all shareholders (including the government) and make it that much more difficult for Ford to keep his election campaign promise to shave 12 per cent off ratepayers’ monthly electricity costs.
Nor will getting rid of Schmidt and the board truly save consumers money. Executive salaries at Hydro One account for just pennies on monthly bills.
In fact, the bullying tactics Ford used to get rid of Schmidt and the Hydro One board could actually cost Ontarians by throwing a wrench into the company’s future profitability and ability to grow.
Schmidt was actually doing a good job on both those fronts. Indeed, Hydro One’s profit in the first quarter of this year hit $222 million, up an impressive 33 per cent over the previous year.
The political manipulation of the company will also make it harder to attract new top leadership at Hydro One. The cavalier way Schmidt was treated is bound to discourage potential replacements. And the company needs a top-calibre professional leader, not a political hack willing to serve as the premier’s errand boy.
Nor is it clear how Ford will live up to his promise of bringing in a new CEO at a much reduced salary, since analysts say Schmidt’s compensation package of $6.2 million last year was not out of line with pay for chief executives at similar-sized companies.
Further, critics are saying the turmoil could further hamper the company’s growth by deep-sixing Hydro One’s planned $6.7-billion takeover of U.S. utility Avista Corp.
Nor will Ford’s actions inspire trust that Ontario is a good place to do business. “If I was somebody wanting to invest in Ontario, I’d be thinking twice today,” Horwath said on Thursday.
There’s no question Ford tapped into voter anger over everincreasing electricity rates when he vowed to get rid of Schmidt, the so-called “$6-million man.”
But the truth is, it wasn’t Schmidt’s earnings that caused the dramatic spike in electricity prices in recent years.
What really jacked up them up was the Liberal government’s $35-billion investment since 2003 in rebuilding the province’s electricity system after years of neglect under previous governments.
Rates rose further due to the closing of coal plants and investment in more expensive clean energy. All that may have cost ratepayers more, but it paid off by ending the costly blackouts and brownouts of the past and ending the smog from coal-fired plants.
Ford fooled voters when he implied that Ontarians would enjoy reduced electricity rates with the firing of one man. And he still hasn’t spelled out a real plan to make the system work better.
Instead, he has introduced a whole new element of political uncertainty into Ontario’s energy equation. This isn’t a good start.