In the past 6 months the government has gutted the intent of the Electricity Act’s financial requirements and now promises to abolish recognizing the value of electricity sector assets in retiring debt claimed to arise from building Ontario’s public electricity infrastructure.
- I covered the development of the current financial structures in Stranded Debt – Abandoned responsibilities, and
- I covered the illegality of the plan to swap profitable Ontario power for subsidized Toronto transit in Ontario’s Outlaw Premier Plots to plunder Hydro One
The government did, in fact, revise the Electricity Act to facilitate their desires, and they intend on once again changing law to ensure no profits from the sale of Hydro One go to pay down debt allegedly due to Hydro One and other public electricity sector assets.
This, for 17 years, was the relevant portion of The Electricity Act 1998:
Proceeds of disposition
50.3 (1) All proceeds payable to Her Majesty in right of Ontario in respect of the disposition of any securities or debt obligations of, or any other interest in, Hydro One Inc. …shall be paid to the [Ontario Electricity Financial Corporation],
On June 4, 2015 the section was changed, beginning:
Proceeds of disposition
50.3 (1) This section applies if an amount is payable into the Consolidated Revenue Fund in respect of…
…and then a whole lot of legal gibberish.
It’s notable that the mature legislation’s “shall be paid to the [OEFC]” seems to be replaced by payment fist into the government’s general coffers (the Consolidated Revenue Fund) – and then to the OEFC. All the following provisions seemed similar, so I didn’t see the significance.
Yesterday, when I was notified of this recent news release from the Ministry of Energy including:
The Province will move forward with amendments to the Trillium Trust Act, 2014, that would, if passed, name the Province’s shares in Hydro One as a qualifying asset and ensure that all fiscal benefits from the estimated gain would be directed to the Trillium Trust.
My assumption is that section 50.3 was altered because not a lot of the revenues from the sale of Hydro One will be booked into the Consolidated Revenue fund to begin with, which is where the revised law states the revenues would flow to the OEFC from.
The public hydro system built over a century of a thriving Ontario has been given to urban transit dreams by a government that has spent more than it has collected each of the past 7 years. Based on that recent performance, the $4 billion the government intends to put into transit from selling off a majority of our very lucrative Hydro One asset will delay borrowing by only 4 months while restricting government revenues forever.