Privatizing local hydro utilities will push up costs

With local hydro privatization, in exchange for a one-time revenue boost, people will be stuck paying higher electricity prices. In both cases, average families will pay more so corporations can make higher profits.

Ottawa (29 Jan. 2015) — To pay for their tax cuts for large corporations and the wealthy, the Ontario government has used a number of “buy now, pay later” privatization schemes. One that’s being looked at is privatizing local hydro utilities.

Cost per customer 77 per cent more with privatization

Based on data from Ontario utilities, privatizing local hydro will mean people pay more for electricity. The cost per customer for local hydro utilities that have been privatized is 77 per cent more than for publicly owned ones.

This shouldn’t be a surprise. With privatization, hydro rates have to cover the cost of corporate profits, as well as the cost of providing a service. But the public are entitled to ask why they should be paying more for poorer service.

Ontario government using privatization as an expensive way to borrow

Privatizing local hydro utilities is just the latest “buy now, pay later” privatization scheme that the Ontario government has come up with. What these schemes have in common is that, while they provide the government with money or infrastructure now, they cost a lot more in the long term.

In December 2014, the Auditor General revealed that Ontario’s use of P3 privatization schemes means the public will be paying $8 billion more than with public delivery. With local hydro privatization, in exchange for a one-time revenue boost, people will be stuck paying higher electricity prices. In both cases, average families will pay more so corporations can make higher profits.

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Keep Hydro Public

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 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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