Despite growing opposition, Kathleen Wynne’s plan to sell Hydro One seems unstoppable. But the premier’s plan is hardly unprecedented.

In fact, the stealth privatization of electrification started decades ago, and continues to eat away at public ownership. Today, roughly half of the province’s power is produced under private management, not by publicly-owned utilities:

The sprawling Bruce Nuclear site, several key hydroelectric stations, and all of the province’s new gas-fired power plants have long been run by private companies.

For any politician, selling an electricity utility is like eating potato chips: It’s hard to stop at just one.

A Progressive Conservative government launched public power in 1906, but a more ideologically-driven PC government tried to rid itself of Ontario Hydro 90 years later: Mike Harris dismembered it — creating Ontario Power Generation (nuclear, coal and hydro), and Hydro One (transmission and distribution) — as precursors to privatization. The Tories were ultimately thwarted by a court ruling, a public outcry, and electoral defeat — but not before a portfolio of OPG hydro stations was leased to the Brookfield private equity firm, and those nukes at Bruce taken over by Alberta’s TransCanada and the OMERS pension fund.

When Dalton McGuinty won power in 2003, privatization was renounced. Until, unannounced, it resumed under his Liberal government: When OPG’s coal-fired power plants were shuttered for environmental reasons, only private companies were allowed to bid on new gas-fired plants (including those controversial sites in Oakville and Mississauga).

Under McGuinty, OPG wasn’t so much privatized as marginalized — and demonized as a profligate crown corporation in need of competition. By contrast, Wynne’s declared preference was to keep Hydro One, but she needs a few billion dollars to funnel into transit investments.

Wynne recruited former TD Bank CEO Ed Clark as (pro bono) head of an outside panel to look at OPG and Hydro One, aided by former NDP cabinet minister Frances Lankin and ex-PC finance minister Janet Ecker. The panel functioned almost as a national unity cabinet, bringing together left and right, backed by high-powered teams of number-crunchers for expert advice.

Its recommendations were unanimous. But some of the panel’s more clear-eyed arguments have inspired wild-eyed counter-arguments by opponents.

The best way to whip up public fear is to warn that rates will rise under a profit-seeking owner, and polls suggest most Ontarians now believe this.

Next best is to argue the government is foolishly forsaking future revenues — it earns a predictable dividend of about $800 million a year from Hydro One — by selling it off for a one-time windfall now.

These two points are not just highly unlikely, but mutually contradictory.

Energy utilities are highly regulated by the Ontario Energy Board. That’s why the for-profit Enbridge monopoly can’t just gouge natural gas consumers at will. And it’s why Hydro One can only charge what the OEB deems reasonable after rate hearings. Incidentally, hydro rates have soared over the past decade for a variety of well-documented reasons — which belies the notion that public ownership inoculates us against increases.

Wynne claims she has learned lessons from the disastrous Hwy. 407 debacle by the PCs in 1999, when a foreign consortium made a killing by raising toll rates, which were unregulated. The canard that a new Hydro One owner could try the same trick to boost profits is contradicted by law.

“Rates are not dictated or imposed by the shareholders of a utility on ratepayers,” notes a recent report by the Gowlings law firm. “Profit taking in excess of a ‘reasonable rate of return’ — a concept that has a clear meaning in public interest law — is simply not permitted ... To suggest otherwise is simply fear mongering.”

When critics warn that a profit-seeking private operator would gouge ratepayers, they mischievously imply that Hydro One is a not-for-profit entity. In fact, it is a commercial enterprise that earns a “regulated rate of return” for its owner, the provincial government. That’s why prospective buyers are banking on that $800 million in annual payments that Hydro One now makes to the treasury.

As to fears that the government is recklessly giving up a future revenue stream, it’s a legitimate question after the Hwy. 407 fiasco. But the price back then was scandalously low, the process secretive, and the timing (on election eve) suspect. By selling off Hydro One in small chunks, with minimal fees, Clark recommended timing the sale to maximize revenue.

It doesn’t help that the government is now trying to buy off the big power sector unions by quietly giving them shares in a privatized Hydro One. But that appears to be a quid pro quo to get them to rein in extravagant pensions.

So if prices won’t rise, and the loss of future dividends is likely outweighed by a handsome sale price upfront, then what’s wrong with this privatization?

Most of the union and opposition scaremongering misses the point: It’s not about prices or revenues. The big risk is in the realm of public policy.

By diluting government control over Hydro One, the Liberals risk reducing their ability — and that of future governments — to direct the public utility to act in the public interest. That’s the Achilles heel in an otherwise muscular report, and it’s not getting the attention it deserves.

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

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