Hydro sell-off goes too far

Selling beer in grocery stores — with all the appropriate social safeguards — is a good idea that is long, long overdue in Ontario. Premier Kathleen Wynne’s Liberal government will earn applause from voters for pushing ahead with this move, and deservedly so.

But loosening the province’s absurdly rigid rules for selling alcohol is, quite literally, small beer compared to the other, less sexy moves that the premier announced on Thursday.

The government is stepping into a political and financial minefield with its proposal to sell off most of Hydro One, the provincial Crown corporation that builds and operates the power grid. It would be much better advised to keep at least a majority stake in the utility to make sure the public interest is safeguarded in the future.

Conservative and Liberal governments have been eyeing Ontario’s rich hydro assets greedily for a decade and a half, but they’ve always backed off on privatization schemes in the end. The public, quite rightly, is wary of such moves, especially as our electricity prices continue to spiral ever higher. Bungled privatizations such as Hwy. 407 and the ORNGE air ambulance sell-off haven’t helped.

Now the premier promises she has found the right formula. Under this latest plan, 60 per cent of Hydro One would be sold off gradually, raising about $9 billion for the treasury. Some $5 billion of that would go to pay down the province’s deficit, with the other $4 billion going into a fund to finance badly needed transit plans.

At the same time, the province would keep a 40-per-cent share of the company and no private investor would be allowed to own more than 10 per cent. The Ontario Energy Board would be strengthened and prices would still be regulated. As a result, says Wynne: “The government would retain de facto control.”

Sounds clever, but there’s an enormous risk that this scheme will go off the rails. Private investors are bound to push for more control; if they don’t believe they can get it, they will be reluctant to pay top dollar for their share, reducing the government’s take from the sell-off. And regulatory agencies often dance to the tune of the industry they regulate even while being pledged to serve the public interest.

If it is determined to go down this road, the government would be wiser to hold on to a majority stake in Hydro One, keeping firm public control and demonstrating to electricity consumers that they won’t end up being gouged even more than they are now. The Liberals need to earn public trust on any such plan, given their past stumbles in this area.

The government no doubt hopes Ontarians will be sufficiently distracted by the alluring prospect of picking up a case of beer with the weekly grocery order that they won’t think too deeply about the complex and confusing power plan.

In fact, the government could and should have gone further in overhauling the province’s rigid rules on selling alcohol. The panel it set up to study the issue recommends doubling the number of outlets selling beer by allowing grocery chains to buy licenses to sell suds, while reforming the quasi-monopoly Beer Store.

But the panel is still tip-toeing cautiously towards reform. For example, it urges only a pilot study in 10 LCBO stores to look at the apparently revolutionary notion of selling 12-packs of beer there. A government that boldly proposes to sell off a $16-billion power company should surely be able to summon the courage to green light the sale of beer in bigger packages.

The province is stepping into a political and financial minefield with its proposal to sell off most of Hydro One