Significant legislation shuts out Ontario Auditor General from examining Ontario Hydro mismanagement

By Randall Denley
Ottawa Citizen
Jul 27, 2017

The important thing about Hydro One’s recently announced acquisition of an American power company is not that it gives our former public utility a tiny stake in an American coal-fired power plant, although the premier’s efforts to justify it have been amusing.File photo.

What does matter is what the $4.4-billion deal tells us about Hydro One’s priorities. The company’s focus is clearly on expanding into the U.S., not serving Ontario customers better.

In buying Avista, Hydro One is simply doing what businesses do, growing wherever it can to boost earnings and share prices. The key indicator of success is meeting the short-term expectations of the stock market.

Contrast that to the old, government-owned Hydro One. Its mandate was to be a safe, reliable and cost-effective transmitter and distributor of electricity in Ontario. Sure, the company made money for the government, but that wasn’t its reason for being.

Now, the focus of Hydro One is moving away from the needs of Ontarians and toward the needs of its new shareholders and power customers in the western U.S. The government has already sold just over half of Hydro One. Ontarians are along for the ride with a multi-billion-dollar investment, but they aren’t in the driver’s seat.


That’s why Premier Kathleen Wynne’s smug little comment about sharing our coal-free “value system” with the folks in Montana was laughable. Unlike the Ontario government, a rational company wouldn’t junk a functioning coal-powered plant because of Wynne’s value system.

It’s easy to see why Ontario is not a priority for a company seeking growth. Hydro One already owns almost all the transmission lines in the province and a big chunk of the power distribution business. Improving the quality of the transmission grid in Ontario is not a money-maker. Ontarians need to use the grid regardless. Same for Hydro One’s power distribution business.

Hydro One has Ontarians right where it wants them. If the company doesn’t do a good job of maintaining and updating our transmission grid, what is our recourse? The government no longer controls the company and there is no competitor for this service.

The province’s own legislation requires it to keep at least 40-per-cent ownership. For Ontarians, it’s the worst of both worlds. Our money is tied up in a power company that no longer has a mandate to put our interests first.

Even when it was Ontario-focused, Hydro One struggled to do its job. Its customer service issues are well-known, but the company’s problems run far deeper. The provincial government likes to say that it has spent tens of billions of dollars to build a clean and reliable power grid, but the province’s auditor general told a far different story at the end of 2015.

The auditor general found that Hydro One power outages were becoming increasingly frequent and lengthy, that there was a serious maintenance backlog, and the company justified higher rates by pointing to failing transformers but failed to replace them. The auditor said that nearly $4.5 billion in transmission assets were already beyond their expected service life. The company didn’t even have a good program of trimming trees to reduce power outages.

The government has dealt with this problem by ruling that the auditor general can no longer report on Hydro One, despite the large public investment.
If the Liberals’ goal was to screw up every aspect of Ontario’s power system, the sale of Hydro One completes their task.

Unfortunately, the likely alternative isn’t offering much comfort. PC leader Patrick Brown has been railing on about the Hydro One “fire sale,” criticizing the CEO’s salary and blaming the company for high power rates. None of that hits the main point. The government has gotten fair value for the company, the CEO’s pay is irrelevant and it is the Liberals who have driven up power rates.

The real problem is that a huge piece of public infrastructure, vital to our everyday lives and economic well-being, is now in the hands of a private company whose interests are drifting elsewhere.