National Post | Ashley Csanady | October 29, 2015
The Ontario Liberals’ plans to sell Hydro One could cost the treasury $500-million annually and will eventually increase the province’s net debt, the financial accountability officer has found.
Julia McKay/The Kingston Whig-Standard/Postmedia NetworkThe Hydro One Gardiners Transformer Station in Kingston, Ont.
The plan is to sell a 15 per cent stake in the Crown corporation each year until 2019, when the province’s stake will be reduced to 40 per cent.
“Once the full 60 per cent has been sold, the province would experience an ongoing negative impact on budget balance from foregone net income and payments-in-lieu of taxes from Hydro One,” the report notes, putting that number at $100 million annually. The treasury will also forego 60 per cent of the current $750-million dividend Hydro One pays the province each year — or another $450 million
Though Ontario’s debt would initially be reduced, at least in part because the sale would lower the “stranded debt” in the electricity sector, that too would rise in the long run.
“Net debt would eventually increase as a result of the partial sale as the costs of forgone revenues from Hydro One begin to exceed the initial fiscal benefits,” the report states.
Finance Minister Charles Sousa said the report affirms the government’s $9-billion valuation and will help pay for infrastructure. He also implied the government will push ahead with the sell-off despite the lost revenues.
“The final price will be set very soon and at that time we will be in a position to know exactly how our estimates and those of Mr. LeClair measure against the market,” Sousa said. “I look forward to continuing to work with Mr. LeClair and continue to be open, transparent and accountable to the people of Ontario.”