As Hydro One is slowly sold off, it won’t be so much missed as misunderstood. And misrepresented.

Misunderstood, because most people living in the Greater Toronto Area have never dealt directly with Hydro One and might reasonably wonder what, if anything, its sale has to do with rising electricity bills. (Answers below.)

Misrepresented, because a political fight over the sell-off of this provincially owned utility is obscured by predictable government contortions and opposition distortions. (Miscalculations below.)

Hydro One is back in the news thanks to the foresight of Ontario’s New Democrats. Wielding the balance of power during the minority legislature of 2011-14, they goaded the governing Liberals into creating a new Financial Accountability Office (FAO), patterned on budget watchdogs in Ottawa and Washington.

The FAO’s first report (first revealed by the Toronto Star’s Robert Benzie last week) takes the shine off the glossy propaganda put out by a Liberal government trying to squeeze fresh cash out of its aging electricity utility. Deconstructing the privatization plan, it predicts a big hit to the province’s budget debt and deficit in future years — because long after the initial windfall from selling off 60 per cent of the utility is spent, the treasury will have lost a recurring source of cash flow.

The opposition pounced, appropriately, on the seeming disconnect between the cabinet’s secret calculations and the FAO’s public methodology. Who’s right?

By its own admission, the report raises more questions than it answers. The Liberals first flagged a possible sale ahead of the last provincial election 17 months ago, but the debate began 17 years ago when the PC government of Mike Harris launched its own ideologically driven privatization agenda.

First, a word or two on Hydro One. It was one of five — yes, five — new entities carved out from its predecessor, Ontario Hydro, by the Progressive Conservatives as part of an alphabet soup of electricity entities in the late 1990s. Hydro One doesn’t actually generate any power — that responsibility remains with another utility created by the Tories, Ontario Power Generation — it just transmits the power along electricity lines.

Anyone served by Hydro One outside the province’s big cities, or in cottage country, knows it only too well as a bloated, bungling behemoth that regularly rips off ratepayers. Its unreliable meter readings made it the single biggest source of complaints to the provincial Ombudsman’s office. That’s why, at a practical level, the old publicly owned company won’t be much missed.

But that doesn’t mean selling off a 60 per cent share makes good public policy sense. And the FAO’s financial analysis isn’t the main reason to oppose it.

On the very day the budget watchdog cast doubt on the privatization numbers, the government announced that it had, in fact, achieved a sales price on the high end of its estimated range — dazzling the financial press. The Globe and Mail hailed it as a “big win” for the government and its privatization czar, Ed Clark: “Ultimately the Ontario Liberals will, and should, take credit for the successful deal,” the Globe gushed.

For all the FAO’s financial acumen, its report requires the reader to assume that Clark (a former TD Bank CEO), his co-chair, Frances Lankin (a former NDP cabinet minister), and their team of financial analysts (public and private sector) don’t understand what they’re selling. And that Bay St. doesn’t know what it’s buying.

My own view is that the numbers are what they are — and that, barring a market shock, the partial sale will yield more or less the $9 billion that the government is counting on, with $4 billion allocated to invest in pressing infrastructure needs (after paying down old hydro debt).

Clark’s response to the FAO report is that it doesn’t tell us anything we don’t already know: selling an asset obviously means you give up future dividends. The question is whether you price the asset appropriately and spend the windfall wisely (investing it in productive assets or engaging in a 407-style fire sale). Clark counters that it’s more important to reallocate the money from fixed transmission lines to new transit lines that will get the economy moving.

I’ve long believed the Hydro One sell-off was a risk not worth taking, mostly because of the public policy peril, not financial risk. Ontario needs the unrestrained ability to shift transmission priorities as and when Quebec hydro power becomes available at the right price.

And what about the obscene salaries planned for Hydro One’s new executive suite? Its private sector compensation is unconscionable — with up to $4 million allocated to its new CEO (several times more than his predecessor got, and at least double that of his counterpart at OPG).

All that said, opposition fear mongering about rising rates is a phoney reason to oppose the sale. Electricity rates are regulated by the arm’s-length Ontario Energy Board, and hence not subject to profiteering. If both opposition parties hadn’t fiercely opposed tax hikes, the government might not have opted for the privatization path of least political resistance, using its 2014 majority to raise taxes, not shed assets.

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The truth is, it’s too late to stop the deal. Any attempt to reverse it would only invite litigation from buyers claiming the promised 60 per cent privatization was a form of bait and switch.

Time to parse the hyperbole over hydro poles. Going forward, there are bigger issues that have been sidelined by the debate about transmission lines — notably the question of ongoing nuclear generation versus energy conservation and alternative supply from Quebec.

Martin Regg Cohn’s Ontario politics column appears Tuesday, Thursday and Sunday. mcohn@thestar.ca , Twitter: @reggcohn

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