Selling Toronto Hydro could create consumer headaches: report

November 18, 2016

TORONTO – A proposal to partially sell off a long held public asset, Toronto Hydro, could turn the private sector’s gain into Toronto consumers’ pain, says a new report by the Canadian Centre for Policy Alternatives’ Ontario office (CCPA-Ontario).

Selling off part of Toronto Hydro would result in the City of Toronto ceding the control it now has over electricity prices, hydro service reliability, and environmental stewardship in the face of catastrophic climate change.

“If the city sells off part of Toronto Hydro, it means handing over the decision keys to private sector interests which will be more concerned about happy shareholders than happy Toronto Hydro customers,” says CCPA-Ontario Senior Economist Sheila Block.

In her report, Selling Off Toronto Hydro: Private Gain, Consumer Pain, Block warns city residents could lose out by a partial sell off in these ways:

  • Higher prices: The available data indicate that partially privatized hydro distributors have costs that are 24 per cent higher than publically owned ones.
  • One-time, short-term profits: If the city sold up to 49 per cent of its control over Toronto Hydro, media reports suggest the value could be $1.5 to $1.9 billion in a one-time deal. That would only cover 6.8 per cent of unfunded capital needs, at best, that the city faces. It’s a drop in the bucket. Even if the city makes the sale, it will still short $27 billion in capital funding.
  • More money still needed: Regardless of the sale price, the city will have to seek sustainable revenue sources elsewhere — either through leveraging new tax dollars or borrowing more at historically low interest rates.
  • Lining the pockets of Bay Street: Any sale of this kind has high transactions costs. They could be over $150 million.

“The tradeoffs that come with giving up part control over Toronto Hydro aren’t worth it,” concludes Block. “Toronto residents will arguably end up paying the price in the long term, through higher hydro rates. The city will be left to clean up the mess while reckoning with a lost opportunity to use a public utility to lead the way on energy conservation.” 

– 30 –

For more information please contact: Trish Hennessy 416-525-4927 or trish@policyalternatives.ca.

Download the report at policyalternatives.ca/ontario

Offices: