Toronto: Aleck Dadson and Patrick Moyle, two consultants from StrategyCorp with deep experience in the Ontario electricity sector, have published analysis that sharply undercuts common misconceptions about Ontario’s planned sale of equity in Hydro One.
In a paper published July 7 reviewing the current status of recommendations contained in the Ed Clark report (the Advisory Council on Government Assets), they wrote the following:
“These developments have taken place amidst the loud and continuing opposition to the proposed Hydro One IPO. For example, many opponents, especially the New Democrats, have argued that the Province’s sale of an equity interest in Hydro One will lead to higher delivery charges for consumers. This argument is based on a mischaracterization of utility regulation in Ontario. The Ontario Energy Board regulates investor-owned transmission and distribution utilities exactly the same way it regulates utilities owned by the province or by municipalities. All distribution utilities, whether they be owned by investors or by governments are subject to the same rules regarding capital structure and rate of return, the same methodologies for setting the rates charged consumers, and the same standards regarding the measurement of customer service and operational performance.
“Opponents have also argued that the IPO will erode effective oversight of Hydro One. This line of argument was fueled in particular by the extraordinary intervention into the debate within the Legislature by the Provincial Ombudsman and the Auditor General of Ontario - who were evidently miffed at the prospect of losing their oversight of Hydro One. However, their concerns are unfounded. The oversight of Hydro One - and indeed other electricity distributors - is first and foremost the responsibility of the Ontario Energy Board. The Board has broad powers to review and set the rates charged by Hydro One, to establish policies regarding the operations of Hydro One and other distributors, to investigate instances of non-compliance, and, in appropriate circumstances, to initiate enforcement proceedings and levy fines and other penalties - these powers are far broader and stronger than those of either the Ombudsman or the Auditor General. Although the OEB may lack the headline-grabbing panache of either of those other agencies, it has the mandate and powers necessary to protect the interests of consumers going forward.” In fact, the OEB has had these powers for some time.”