>THE HYDRO ONE SELLOFF

‘Bay Street is going to be mad at us’ says Ontario’s privatization adviser

Bay Street won’t be able to “skin” taxpayers, province vows, as 60 per cent of Hydro One to be sold for $9B,

Bay Street investment dealers dreaming of fat fees on the $9-billion Hydro One privatization will be disappointed, warns the former banker who led an expert panel advising the government on asset sales.

“There’s not going to be a lot of money made out of this,” Ed Clark said Thursday after recommending Premier Kathleen Wynne sell up to 60 per cent of the Crown utility, as first reported by the Star, and ease 1927 restrictions on beer sales that favoured foreign-owned Labatt and Molson.

“Bay Street is going to be as mad at us, as the brewers were, because we’re not going to let them skin us,” he added, promising investment dealers would be prevented from raking in their usual commission rates.

Clark, the retired chief executive of TD Bank, said the Hydro One sale will begin with an initial public offering of 15 per cent, with more to follow — a period Wynne put at “four to five years.”

The sell-off to institutional investors, such as pension plans, could mitigate electricity price increases, but won’t ensure lower rates.

“I can’t guarantee that,” the premier told reporters at a news conference with Clark, whose panel included former Progressive Conservative finance minister and one-time NDP cabinet minister Frances Lankin.

Wynne also would not say whether Hydro One, along with the spinoff of its Hydro One Brampton subsidiary for a merger with three other GTA, Hamilton and Niagara utilities, is the start of a trend as her government scrambles to erase its $10.9 billion deficit by 2018.

The premier defended the Hydro One move, which will yield $5 billion to pay down debt and $4 billion for transit and infrastructure improve- ments to reduce gridlock and boost the economy.

“The people of Ontario keep the largest share of ownership, gain billions of dollars that can be invested, avoid having to borrow money and strengthen the protections that ratepayers enjoy,” Wynne said. NDP Leader Andrea Horwath questioned the sale, which comes with no guarantee of lower rates, and said the $4 billion for transit would be “barely enough money to fund even half of the Toronto downtown subway relief line.”

Progressive Conservative MPP Vic Fedeli said he expects “not a penny” will go to transit with the government under the gun to erase red ink.

Clark said the plan to sell chunks of Hydro One slowly, with no investor holding more than 10 per cent, is the best way to get the most money for taxpayers — unlike the Progressive Conservative government’s unloading of Hwy. 407 all at once.

“We are not going to repeat that mistake,” said the Bay Street veteran, admitting “there will be some lost income to the province” as investors earn a share of Hydro One’s $287 annual dividend.

But injecting some private-sector entrepreneurship in the company will help it expand and return an “increasingly profitable dividend” to the province, he argued. With files from Richard J. Brennan