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Ontario argues Hydro One suit is political complaint dressed up as legal one

In a courtroom fight over the privatization of Hydro One, CUPE has alleged the Ontario Liberals inappropriately mixed government and party business


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The province recently announced a plan to sell another tranche of Hydro One sales. PHOTO: Raysonho, via Wikimedia Commons

TORONTO—Ontario’s Liberal government argues a lawsuit over the controversial partial sale of Hydro One is a political complaint “dressed up” as a legal one.

Lawyers for the government recently filed a motion to try to get a lawsuit from the Canadian Union of Public Employees thrown out.

The union lawsuit—filed last December—was aimed at stopping the sale of any more shares in Hydro One, but the government announced the sale of the final tranche May 8, which will leave the province owning less than half of the giant electricity transmission utility.

CUPE’s lawsuit alleges the Liberals inappropriately mixed government and party business by holding fundraisers with cabinet ministers, including one $7,500-a-ticket event that was attended by bankers who profited from the privatization of Hydro One.

“Premier (Kathleen) Wynne has made it clear she will not listen to the experts who warn that the sale is bad for the province, or listen to the people of Ontario who have been unequivocal in their rejection of the plan,” CUPE Ontario president Fred Hahn said in a statement.

“Now she seems determined to push ahead with the sell-off so that she won’t have to listen to the court either. It’s disgraceful and we will continue to try and stop her.”

The government argues in its motion to strike the lawsuit that there is no basis for challenging government policy and no conduct was unlawful.

“This claim appears to be a political complaint dressed up as a legal claim,” the government writes.

“The plaintiffs’ claim is an attack on legislation passed by the Legislative Assembly of Ontario and in turn a core policy decision made by cabinet to broaden the ownership of Hydro One. These decisions are not reviewable by the court.”

More than a year before the Liberal government announced in 2015 that it would partially privatize Hydro One, polling showed strong opposition to the idea.

Polling firm Pollara conducted research at the government’s behest in January and February of 2014 asking people for their thoughts on selling Hydro One, and just 25 per cent of respondents supported the idea.

Energy Minister Glenn Thibeault said Tuesday he understands some of the opposition.

“But the way I look at it is doing the right thing isn’t always the easy thing and making sure that we have over $9 billion now to invest in infrastructure, into transit, into transportation infrastructure, that’s the right thing to do,” he said.

The government has said $4 billion will go to infrastructure spending and $5 billion will be used to pay off hydro debt.

The final sale could raise gross proceeds of up to about $3.1 billion and leave the province with a 47.8-per-cent ownership stake. That puts the government over its target of $9 billion, together with $1.7 billion from the previous offering, $1.83 billion from the initial public offering, $2.2 billion from a deferred tax benefit, an $800-million special dividend and $200 million in payments-in-lieu of taxes from Hydro One.

The money raised is a small part of the $190 billion the government has promised to spend on infrastructure over 13 years, but Thibeault said the advantage to raising infrastructure money this way was it could be spent quickly.

He couldn’t, however, explain why the government didn’t see an advantage in retaining at least 50.1 per cent of the utility.

“We said in legislation that we would not go under 40 per cent,” Thibeault said. “When looking at the 40-per-cent component we still, as a shareholder, will have and name 40 per cent of the board…we still have other pieces that we put in legislation that allow us to have some of the shareholder controls that any other shareholder would have.”

NDP critic Peter Tabuns said Thibeault was sticking to his talking points.

“They’re giving up a huge part of Ontario’s legacy,” he said. “They’re undermining Ontario’s ability to control its energy future. They’re setting the stage for much higher hydro prices in the years to come. No wonder he doesn’t want to answer the question.”

The Progressive Conservatives criticized the “Bay Street bonanzas,” referring to the underwriter banks that make money from the sale.

“The minister is once again more interested in making money for the people sending the hydro bill than he is in protecting the people who are receiving the hydro bills,” said critic Todd Smith.


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