Environmental issues follow Hydro One privatization

“As expected, privatization means that protecting the environment takes a back seat to maximizing profits.”   — Elisabeth Ballermann, NUPGE Secretary-Treasurer

Ottawa (26 July, 2017) — In addition to higher costs, privatization has allowed Hydro One to spend $6.7 billion to buy a U.S. utility that still relies on coal for a significant portion of its electricity. This is in spite of Ontario banning coal-fired electricity generation in 2015 to combat climate change.

“As expected, privatization means that protecting the environmental takes a back seat to maximizing profits,” said Elisabeth Ballermann, Secretary-Treasurer for the National Union of Public and General Employees (NUPGE).

Purchase of U.S. utility turns back the clock

Avista, the U.S. utility purchased by hydro one, relied on coal-fired generation for 9 per cent of its electricity.The company is co-owner of a coal-fired electricity generation plant in Montana that is one of the largest emitters of greenhouse gases in the U.S. According to a recent business plan, Avista wants to keep using electricity from coal-fired power stations until at least 2037.

Ontario went to considerable effort to stop using electricity from coal-fired power stations and with good reason. Greenhouse gas emissions from burning coal are a major contributor to climate change.

Now, with privatization, the board of the privatized Hydro One can turn back the clock and spend $6.7 billion on a utility that’s still relying on coal-fired plants for electricity.

Avista stake in coal-fired plant could increase

While Avista has no plans to reduce it’s use of electricity generated from the coal-fired plant it co-owns, the same cannot be said of the other owners. Three of the utilities that own the plant have made plans to switch to greener sources of electricity. Another co-owner has said it plans to cease operating the plant in 2018 and hopes to sell its stake before then. These actions could leave Avista forced to increase its stake, or paying the costs of an unplanned shutdown.

Public paying for the $6.7 billion takeover

Hydro One is paying $6.7 billion for Avista. Either directly or indirectly, Ontario residents will be paying.

Hydro One has one source of revenue — the rates it charges customers. The money it borrows to help fund the takeover will be repaid from the rates it collects from customers. The interest on the money it borrows will be paid from the rates it collects from customers.

Even the portion of the takeover funded though debentures that can be converted to shares will end up being paid for by Ontario residents. Either the Ontario government will have to spend $700 million right now to maintain its 49 per cent share of Hydro One or the further reduction in the governments stake in Hydro One will cost Ontarians in the long-term.

“Ontario residents are already struggling with rising electricity costs. This takeover will mean higher profits for investors at the public’s expense,” said Ballermann.

Decision shows what happens when public loses control

With privatization, the job of the Hydro One board is to make a profit for investors. Protecting the environment and the public is no longer a concern.

The claim by Ontario premier Kathleen Wynne that the purchase of Avista will be a chance to export Ontario’s policy on coal-fired plants is a feeble attempt at green washing. As the Ontario energy minister admitted, because the province owns less than half of Hydro One, the company is independent from the province and will make its decisions based on what is likely to increase profits for investors.


NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 370,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. ~ NUPGE

 

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