New wrinkles in Hydro One scheme
Kathleen Wynne is trying to shut down a lawsuit challenging her plans to privatize Hydro One. The Ontario premier would be wiser to simply abandon her foolhardy scheme altogether.
Of all the maladroit moves Wynne has made as premier, privatizing Hydro One is the worst. It creates no economic benefit for the province. Nor does it help the government’s finances.
In fact, as the Financial Accountability Officer and others have pointed out, the loss of lucrative Hydro One dividends will ultimately cost the provincial treasury more than it gains.
Politically, the sale of 60 per cent of Ontario’s public electricity transmission monopoly to private interests can only remind voters of how badly the hydro file has been botched. There is no upside.
Given all of this it is puzzling the government has been so dismissive of a civil lawsuit launched by the Canadian Union of Public Employees that accuses the government of wrongfully exercising its lawful authority and calls for the gradual privatization of Hydro One to be stopped.
Instead of countering the union’s legal case with facts, the Wynne government has asked the courts to dismiss it out of hand.
The government’s key argument is that the courts have no business second-guessing lawful ministerial actions. The government also insists that if ministers have acted contrary to the Members’ Integrity Act, as the lawsuit alleges, then any remedy lies solely with their fellow legislators — not with judges.
Whether or not that claim is valid, it is odd to see a government so down in the polls trumpeting the sanctity of parliamentary privilege.
To read the plaintiffs’ statement of claim is to relive the nuttiness that surrounded the Wynne government’s about face on Hydro One.
First, the Liberals said they had no intention of privatizing the utility. A blueribbon advisory panel tasked with looking into government assets, agreed.
Then the Liberals changed their minds and said they would sell 60 per cent of Hydro One, effectively transforming it into a private monopoly. The blue ribbon panel oblig-In ingly agreed to that as well.
In December 2015, following the sale of the first chunk of Hydro One shares, the Liberal party held an “appreciation” event to which they invited all those who had profited from the privatization. The 24 who showed up demonstrated their appreciation by donating $7,500 each to the Liberals.
Integrity Commissioner David Wake later ruled this was just fine, although he did hint that it might have looked bad.
Meanwhile, a host of reports pointed out that the Hydro One sell-off was a terrible deal for Ontario financially. Yes, it did free up $4 billion that the Liberals promised to spend on infrastructure.
But the loss of Hydro One dividends cost them more.
In addition to recounting old history, the plaintiffs make two interesting allegations. First they say the government cost taxpayers an extra $2.6 billion when it covered, on behalf of the future private owners of Hydro One, a key tax liability owed by the utility.
The details are complicated. But essentially, says the statement of claim, the government forgave a $2.6 billion tax bill owed it by Hydro One’s new private owners.
Second, the plaintiffs say that in allocating the proceeds of the sale, the government cost business and industrial electricity users an additional $1.2 billion in so-called debt retirement charges that they should not have had to pay.
The government hasn’t responded to any of these charges substantively. In effect it has said to both the courts and the plaintiffs: This is none of your business.
In legal circles such a strategy is probably clever. In politics it is not.
The Wynne government might want to remember that Hydro One is a huge, festering political sore — particularly in the countryside.
It also might want to remember that judges are hard to predict. In April 2002, another Ontario judge ruled that another attempt to privatize Hydro One — this time by a Progressive Conservative government — was illegal.
That ruling came as a surprise to most. Its legal effect was brief (the government just changed the law). But the political effect was enormous.
Already under attack for their handling of electricity, the Progressive Conservatives quickly backed away from plans to privatize Hydro One. They lost the next election anyway.
Oh yes. I almost forgot. CUPE, the union backstopping the current lawsuit was one of the plaintiffs in that 2002 case as well. Their lawyer, then as now, was public interest litigator Steven Shrybman.