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Privatize Toronto Hydro?
In 1906 there was an epic battle between the public and private sectors for Hydro. Sir Adam Beck (a conservative) led the charge for public power. After years of touring the province with his electric light show and seven referendums, he won the battle for public power. The price of electricity dropped from 8 cents to 4 cents a kilowatt hour. On his deathbed he said I wish I could have lived long enough to build a band of iron around Ontario Hydro to keep it safe from the politicians. He might have added And safe from the profiteers.
The Blue Ribbon Panel the Mayor established to look at the financing of Toronto’s needs is hardly as impartial, objective or independent as the report claims. It includes very significant participation from the corporate sector whose ultimate concern is not the public good but a new opportunity for huge profits through the privatization of Toronto Hydro.
There are two fundamental democratic questions here, one is process the other is control and benefits. In the last Municipal election the sale of Toronto Hydro was not part of the platforms of any candidates. It received no discussion and therefore there is no mandate to sell any part of Toronto Hydro. In 2002, Toronto City Councilors passed a resolution against Hydro privatization and deregulation. This motion was also passed by forty city councils including Ottawa, London and Windsor.
The attempted privatization of Toronto Hydro is happening in a legislative environment left over by the Harris Government and by the McGuinty government, in spite of its pre-election promises quietly continuing to privatize Hydro. If Toronto Hydro, the biggest municipal utility in Canada was privatized, it would be much easier to privatize the rest of the province.
Last year Toronto Hydro sold 85,000 water heater customers to the private sector with no public consultation whatsoever. A huge opportunity for conservation was lost. The water heater department was sold for $41million but the city only got $12 million. Much of the rest went to commissions to financial institutions. Senior staff at Toronto Hydro is right now, aggressively promoting the sale of Toronto Hydro Telecom, again with no public consultation. Toronto Hydro’s senior staff and board of directors were put there to operate in the public interest, not private profit. The first problem that needs to be fixed is that of directly electing these officials and ensuring public participation se we can control Hydro in the public interest.
Toronto Hydro Telecom is a very successful, profitable company that makes money for the city. Selling assets like Toronto Hydro or any part of it to pay down your debt is like burning your furniture to heat your home. What do you do when the furniture is gone and you still need heat?
The sale of Toronto Hydro Telecom is proceeding very quickly. It should be stopped immediately and an independent assessment should be made. The decision to sell should be made by city hall rather than the unelected Hydro Board members. Even if they got $500 million for the sale of Telecom, that amount would not come anywhere close to the amount it would cost of installing the fibre optic infrastructure in the ground today. That’s why private telecom businesses are so eager to buy it. The information highway is the future and only a publicly owned Toronto Hydro Telecom would guarantee a future in the public interest.
The number one reason Toronto Hydro should remain publicly owned is the environment. Climate change and global warming are going to be the number one concern for the rest of our lives. Franz Hartmann of the Toronto Environmental Alliance says that Public ownership of Toronto Hydro is critical to curb global warming and clean the air. That’s because ownership of our municipal utility is the key lever City Hall has to deliver effective conservation programs and green generation. Selling Toronto Hydro would seriously undermine the City’s ability to implement the aggressive smog and climate change plan it passed last July.
Claims from the private sector saying that it doesn’t matter who owns Hydro, because it’s regulated by the Ontario Energy Board are patently false. Private owners will continuously lobby and pressure us, threatening to withhold essential investments unless governments grant them the legislative changes, environmental standards and price increases their profits demand. We don’t want to be at the mercy of Toronto Hydro like we are to the highway # 407 owners.
Toronto Hydro is starting a major rebuild. Would the private owners rebuild the infrastructure or just put band-aids on it to maximize profits? Private borrowing is much more expensive than public borrowing for infrastructure construction and those costs would be passed onto the ratepayer. Both the broader economy and the public sector depend on reliable and affordable electricity. Electricity cannot be stored or stockpiled, it is a necessity and Governments still retain the risk when these corporations fail. If governments are responsible for the risk of electrical utilities, shouldn’t they own them?
A sale to entities like pension funds does not resolve this concern either. Once a company is sold, it is often sold and resold again to multinationals. Toronto Hydro is crucial for the environment and the economy. Toronto Hydro is a cash cow that provides stable funding to the city every year. Public ownership with its stable and low rates attracts and supports business in the community.
Here’s the main point. Public ownership of Toronto Hydro benefits 100% of the public, private ownership benefits a tiny fraction of 1%, the private owners. Selling any part of it would be like eating your seed grain. A really bad idea.
Paul Kahnert
