The case against privatizing Hydro One

In the early 1900s, Toronto entrepreneur Henry Pellatt used his enormous wealth to build the most magnificent private residence ever seen in Canada — a stunning palace that took 300 workers three years to construct and featured an oven large enough to cook an ox.

The construction of Casa Loma put to rest any doubts about whether there was money to be made harnessing the power of Niagara Falls, which was how Pellatt had made his fortune.

It also undoubtedly made the people of Ontario feel wise about their decision to capture some of that wealth for themselves, which is what they’d voted to do in referendums across the province in 1907.

The results of those referendums overwhelmingly confirmed that Ontarians favoured wresting control of the budding power industry from the clutches of a handful of entrepreneurs, including Pellatt, whose effective monopoly enabled them to jack up prices and restrict scarce electricity to communities where it could be provided most profitably.

The vote followed a long campaign by a popular alliance of farmers, workers, businessmen and civic leaders, who fought to ensure the vast energy of Niagara Falls would be developed, not for the benefit of Pellatt, but in the public in- terest, as Howard Hampton and Bill Reno document in their 2003 book, Public Power.

Today, more than a 100 years later, the Liberal government of Kathleen Wynne is hoping Ontarians have long since abandoned the passion that fuelled that popular movement and led the Conservative government of James Whitney in 1905 to create Ontario Hydro, the world’s first publicly owned utility.

But polls suggest much of that passion remains.

Internal polling done for the Wynne government — released under Access to Information — found that 73 per cent of Ontarians oppose the government’s plans to privatize Hydro One, the key transmission arm of the original public utility.

It’s striking that Ontarians still favour public ownership, given that the dominant ideology of our times has vilified government and the public sector, while celebrating the alleged superiority of the private sector.

In this atmosphere, it has been easy to forget that public ownership means something is owned by all of us, compared to private ownership where only a select group are owners.

Ontario Energy Minister Bob Chiarelli recently insisted that, in selling shares to private investors, the government is seeking “to broaden the ownership of Hydro One.”

Really? Hydro One is already owned by all the people of Ontario. By selling off 60 per cent of it, the government is putting the majority of this vital utility into private hands, diluting our collective ownership.

Wynne is no privatization ideologue, but she wants to use about $4 billion of the proceeds from the privatization to build public transit and infrastructure.

These things need to be built, but is the solution to sell off vital public assets in order to build new vital public assets?

Or is it time to begin reversing the tax-cut binges of recent decades that have left provincial and federal cupboards bare, while bestowing tax savings mostly on corporations and the well-todo?

Wynne insists that even though the government will own only 40 per cent of Hydro One, it will be the largest single shareholder with an effective veto over key decisions.

But can we count on it — or future governments — to actually use that veto, given their well-known timidity to interfere with private enterprise?

As Star columnist Martin Regg Cohn has noted, under public ownership, Hydro One took important environmental initiatives, such as installing smart meters in Ontario homes and speeding up links to wind and solar energy sources.

It’s unlikely a privatized Hydro One would take such initiatives if they interfered with profits.

And profits, not the public interest, will rule in the new corporate culture. That culture is already in full-swing at Hydro One, with the new CEO earning triple what his predecessor made.

In privatizing, a government surrenders important levers over public policy, and it’s hard to imagine an area where surrendering control is riskier than energy.

While the sentiment may be out of sync with our times, it’s hard not to be inspired by the 1905 words of then-premier Whitney, as he pledged to introduce public power: “I say on behalf of the Government, that the water power all over the country should not in the future be made the sport and prey of capitalists and shall not be treated as anything else but a valuable asset of the people of Ontario.”