“It’s going,” Wynne said firmly on Thursday in Niagara-on-the-Lake.
As first disclosed by the Star, Stephen LeClair, the recently appointed financial accountability officer, warned Thursday the province will be in even “worse” shape after the sale of the Crown utility.
In a 41-page report, LeClair said there is much “uncertainty” surrounding the sale of the electricity transmitter.
But Wynne disputes his conclusion.
“In terms of the long-term, we thought this was the right way to go,” the premier said at the Ontario Economic Summit at the White Oaks Resort and Spa in Niagara-on-the-Lake.
At Queen’s Park, Finance Minister Charles Sousa said the government needs the proceeds to help fund a 10-year $30.5-billion expansion of transit, roads, and bridges.
“Our government remains on track to realize our target of $9 billion through the broadening of ownership of Hydro One,” said Sousa.
Of that $9 billion, $4 billion is earmarked for transportation and $5 billion to pay off the utility’s debt.
“I welcome Mr. LeClair’s assessment of our government’s effort to broaden the ownership of Hydro One,” the treasurer said.
“In particular, I appreciate his reaffirmation of our government’s valuation of Hydro One through the initial public offering which is now underway,” he said.
“Net proceeds will be put aside to help finance our government’s plan to invest in infrastructure such as roads, bridges, and public transit in a way that both saves borrowing costs and does not add to the province’s debt.”
Sousa added that “broadening ownership of Hydro One will also result in a stronger-performing, more customer service-focused company.”
“Increased efficiencies will result in operating cost savings which can be passed on to rate payers,” he maintained.
But LeClair warned the move would increase the provincial debt by reducing revenue.
“In the years following the sale of 60 per cent of Hydro One, the province’s budget balance would be worse than it would have been without the sale,” he writes in his first-ever report to the legislature.
“The province’s net debt would initially be reduced, but will eventually be higher than it would have been without the sale,” he continues in An Assessment of the Financial Impact of the Partial Sale of Hydro One.
“Assuming the province sells 15 per cent of Hydro One in 2015-16, Ontario’s net debt would initially be reduced by $2.4 billion to $3.9 billion. However, net debt would eventually increase as a result of the partial sale as the costs of forgone revenues from Hydro One begin to exceed the initial fiscal benefits.”
That’s in part because Hydro One brings in around $750 million to the provincial coffers annually.
LeClair said the transmitter is worth between $11 billion and $14.3 billion and that the proceeds would be between $3.3 billion and $5.8 billion after its debt is repaid.
The Hydro One initial public offering — the biggest this year in Canada — will begin in days. Shares will start at between $19 and $21 each.
Wynne was urged to sell the company by her privatization guru Ed Clark, the former TD Bank chair who is also behind the expansion of beer sales in grocery stores.
Both the Progressive Conservative Leader Patrick Brown and NDP Leader Andrea Horwath are pushing the Liberals not to sell such a valuable asset.
Original Article
Source: thestar.com/
Author: Richard J. Brennan, Robert Benzie
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