Hydro Unplugged

Rating: NNNNNThe Tories got a shock last week when Justice Arthur Gans pulled the plug, at least temporarily, on the.

Rating: NNNNN

The Tories got a shock last week when Justice Arthur Gans pulled the plug, at least temporarily, on the government’s plans to privatize Hydro One. Gans raised a number of concerns about the government’s handling of its privatization scheme, including that the Tories tried to ram the plan through without proper legislation and against the public interest. An excerpt from the ruling:

Ontario Hydro is one of the de-fining characteristics of the province, one in which its residents can identify and one by which the province is known internationally. Its creation was the primary reason a knighthood was bestowed on Sir Adam Beck in 1914. His sculpted image stands watch over University Avenue.The province proposes to offer for sale all of the common shares of Hydro One, the effects of which will call for the privatization of Hydro One.


It is the applicants’ position that the proposed IPO (initial public offering of shares) contravenes the Electricity Act because there is no authority in the province to dispose of the shares. The applicants are members of two large unions (the Communications, Energy and Paperworkers Union and the Canadian Union of Public Employees). Interestingly, employees of Hydro One are members of the Power Workers Union (PWU), which opposes the application. The PWU is a CUPE local.


Counsel for the minister of energy advances two arguments: 1) unions have capacity to sue solely for purposes of matters relating to labour relations and 2) because the private rights of the applicants are not directly affected and because no public interest issue is engaged or could be advanced…, the matter is not otherwise justiciable. In my respectful opinion, the two arguments aforesaid must fail.


It has long been recognized that unions have an interest in matters which transcends the “realm of contract negotiations and administration.” Inherent in this proposition is the notion that interests of labour are expansive and are meant to include more than “mere economic gain for workers.” There is a public interest standing that should be recognized in this case. I do not accept the suggestion that the applicants are mere busybodies or officious intermeddlers.


The purposes of the (Electricity Act) are (among other things)… to ensure Ontario Hydro’s debt is repaid.

(But) absent from the legislative scheme (proposed by the Tories) is the fact there is no provision for paying down the “legacy” debt from the sale of shares. This conclusion was discoverable after undertaking a microscopic examination of the Electricity Act… if not the fine print of the prospectus.

In other words, any dollar generated by the proposed Hydro One IPO is not directed by a statute towards discharging the large debt with which the beleaguered Ontario Hydro was saddled. Any money generated… will be, if not must be, paid into the consolidated revenue fund… for any and all government programs.


Why wouldn’t there be some simple language directing, if not mandating, the payment of the proceeds to (the paying down of the debt)?

Does not the absence of such provisions undermine the stated purpose of the Act? One might argue this omission was purposeful so that the government could pay but a portion of the funds (to the debt and the rest to finance government programs).

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