Entries in Hydro One (2)

Thursday
Aug202015

Greater Peterborough Chamber of Commerce and Ontario Chamber of Commerce call for transparency on implications of Hydro One sale 

PETERBOROUGH, AUGUST 20, 2015: The Greater Peterborough Chamber of Commerce have joined a province wide coalition of 36 Ontario Chambers of Commerce and Boards of Trade calling on the Government of Ontario to provide factual evidence that electricity prices will not increase as a result of the government's decision to sell off 60 percent of Hydro One.

“Rising electricity prices are a collective concern and have put Ontario businesses at a competitive disadvantage,” said Stuart Harrison, President & CEO of the Peterborough Chamber “It is important to recognize that electricity represents a significant cost to employers. As the government moves forward with the sale of Hydro One, it is essential that it works to ensure that business operation in Ontario remains affordable by containing electricity costs.”

In a recent report by the OCC, Empowering Ontario, Ontario’s chambers of commerce called for increased transparency around electricity and system cost drivers from the provincial government. The partial sale of Hydro One should be subject to a similar level of scrutiny. 

In the short time since the release of the 2013 Long Term Energy Plan (LTEP), industrial electricity rates have increased by 16 percent, and will increase a further 13 percent over the next five years. According to a survey conducted by the OCC, one in twenty businesses will either shut their doors or move to another jurisdiction in the coming years due to these rising rates. The Government of Ontario needs to make certain that the cumulative burden on business operation in Ontario does not increase due to the partial sale of Hydro One.

“The Ontario Chamber Network is concerned that the sale of Hydro One could adversely affect the cost of doing business in the province by adding to the rising price of electricity,” said Harrison. “As such, we are seeking detailed clarification from the government on how the sale will impact electricity prices.”

Members of the Chamber Network, Boards of Trade and local businesses are joining efforts to highlight the concerns being felt by business owners across varied sectors and regions in Ontario. The Chamber Network looks forward to the provincial government joining these discussions in order to provide some clarity around the future competitiveness of Ontario’s electricity system.  

Letter to Premier Wynne 

Wednesday
Apr222015

OCC: Selling off Hydro One - the key details for business

Most notably, the government announced that they will proceed with the sale of a portion of its interest in both the transmission and distribution components of Hydro One, Ontario’s largest distribution utility. With a
valuation of $13.5 to $15 billion, the sale will raise an estimated $4 billion
that will be invested in transit and infrastructure through the Trillium Trust. However, the majority of the sale – $5 billion – will be used to pay down the utility’s debt.

The divestiture of a portion of Hydro One will be staged over time in order to protect the public interest. The first step will be an initial public offering of 15 percent on the stock market. Over time, government will sell the remaining shares, retaining 40 percent of ownership.

In response to concerns over the impact of the sale on electricity rates, the government has committed to ensuring that the sale of a portion of Hydro One will not lead to higher rates.

OCC Position
For the past several years, the OCC has been calling on the provincial government to ensure it is maximizing
 the value of its assets, including Hydro One. The announcement is a bold step that will allow the provincial
government to pay down a portion of its stranded debt and make much needed investments in transportation
infrastructure. However, the announcement also raises key questions to which the OCC will be seeking answers: 

  • Can government guarantee that the sale of Hydro One Brampton and a portion of Hydro One will not affect electricity rates?
  • While the short-term impact of the sale of 60 percent of Hydro One will generate short-term revenue, what will be the long term impact on government’s fiscal situation?
  • Will strategic buyers be given the flexibility to implement private sector discipline that will allow for an eventual reduction in electricity rates?

While the OCC is cautiously optimistic about this announcement, it is clear that there are details that have yet to be determined. Ontario’s economic growth is dependent on our ability to create a competitive business climate. Rising electricity rates have been cited by our membership as a consistent problem that hinders businesses’ ability to compete on a level playing field with our North American counterparts. According to OCC survey results, 4 percent of businesses will either shut their doors and/or move to another jurisdiction in the coming years due to these rising rates.

The Government of Ontario must ensure that any steps taken to pay down the debt not adversely affect the cost of doing business in the province. We are committed to remaining an active participant in any discussions about the future of Ontario’s electricity system.