As soon as I heard that the Sierra Club supported and was involved with the takeover of Avista Utilities by Canada’s Hydro One, I knew there was a problem. My concerns bore out at today’s Washington State Public Utility Commission [actual name: Washington Utilities and Transportation Commission] hearing at the Spokane Valley City Hall. I signed in to testify as soon as I got there, and voiced my questions based on information about Hydro One that I gleaned from the Ontario Electricity Financial Corporation Annual Report.
I was amazed, but not surprised by all the people who went to the microphone to give testimony that revolved around “climate change”, and opined about how it was vitally important to shift away from “fossil fuels” to alternative energy sources like wind and solar in order to save, not just polar bears, but all of mankind.
More than one witness proclaimed that humanity would be facing extinction before the turn of the next century if we didn’t stop climate change. For some unexplained reason these people believe that the sale of Avista to Hydro One will prevent humankind from going the way of the Dodo bird. I wondered if these people knew that nuclear power made up over 40% of Hydro One’s current energy portfolio? I also wondered if they knew that Avista’s clean energy footprint was far superior to Hydro One’s? I wondered if these people knew anything about anything….but I digress.
Well after what seemed like an eternity listening to one lunatic after another, interspersed with some sound common sense from a few sane people, I finally got my chance to approach the microphone. I was nervous, and could feel my voice shake, but I dove right in.
My first question to the Commissioners was, “Who owns Hydro One?” Under Canadian confidentiality laws, it is very difficult, if not impossible, to uncover who Hydro One’s major shareholders are. We know that the Provincial government of Ontario owns about 40% of the company. We also know that Hydro One was birthed out of the 1999 Ontario Hydro restructuring deal. While the parent company Ontario Hydro was 100% owned by the Provincial government, Hydro One was put on the Toronto Stock exchange and is majority owned by private parties. Yet nobody seems to know (or care) who actually owns shares in the company.
My second question drew some audible gasps from the gallery. It was about the specifics of the 1999 restructuring deal that spawned Hydro One. I must have hit a nerve, because I noticed that all three Commissioners seemed to be feverishly taking notes. All I did was reference the $38 Billion (capital “B”) debt incurred by Hydro One’s parent company, Ontario Hydro, which necessitated the restructuring. I asked how that debt was being paid off, and if we, local Avista customers, would be paying for that debt on our utility bills if Hydro One acquired our regional utility.
I didn’t really have much else to say, since I had no intention of answering any of the issues raised by the lunatics. I did say I would like to hear from the Hydro One representatives about these concerns and I did also enter the 40 page 2017 Ontario Electricity Financial Corporation Annual Report into the public record for the Commissioners to review.
Following the hearing, Daniel Levitan, the PR guy from Hydro One, tracked me down to try and answer my questions. I appreciated his effort and we spoke for quite some time out in the hallway. According to Mr. Levitan, Hydro One did not inherit any of the $38 billion debt from Ontario Hydro, the government owned parent company. When the original company was restructured in 1999, a debt repayment plan was devised. According to my sources, (thanks Carl!), the restructuring package was guided by the infamous globalist, Maurice Strong.
According to Mr. Levitan, while Hydro One did acquire much of the hard assets and infrastructure of the parent company, as well as the customer base, they do not “own” any of the debt.
But I don’t believe Mr. Levitan was telling me all of the truth. After reading through the OEFC documents again this evening, it is clear that Hydro One’s assets are counted as “collateral” against that massive debt. According to the OEFC, “A portion of the $38.1 billion was supported by the value of the assets of Ontario Hydro successor companies.” Hydro One is in fact, a successor company birthed out of that restructuring. [See: https://www.oefc.on.ca/debtmanage.html%5D
It is also clear that Hydro One has been paying a “corporate tax” that has in fact, been going towards repaying a portion of that debt. Although Mr. Levitan is technically correct that a “debt retirement charge” no longer appears on customer bills, the fact is Ontario Hydro’s massive debt has been passed off to all of the tax payers in Ontario, as opposed to just the utility company’s rate payers- (gee, that’s a relief, NOT!) The fact is, everybody in Ontario is still being charged with paying down that massive debt!
Hydro One wants to acquire our regional utility not because they want to save polar bears, no, but because by acquiring Avista as an asset they are building up their revenue stream. Avista’s comparatively clean energy sources (hydro, wind, natural gas, and a very small percent from coal) plus their lack of debt makes Avista an ideal acquisition for a foreign corporation.
Please take a look at the info provided by OEFC. If you are savvy with budgets or are an accountant, I’d be most interested in what you think about how the parent company was restructured and the debt repayment plan devised. I don’t do budgets, and I don’t understand technospeak…but it would appear from a plain reading of the text that Hydro One was responsible for making “tax” payments that were directed towards the debt incurred by their parent company, Ontario Hydro. Here’s an excerpt:
Debt Repayment Plan (page 5 – OEFC Annual Report)
“OEFC services and retires the debt and other liabilities of the former Ontario Hydro from the following revenue and cash flow sources in the electricity sector:
- Outstanding notes receivable from the Province, OPG and IESO.
- PIL of corporate income and property taxes, and Gross Revenue Charges made by OPG, Hydro One and municipal electric utilities.
- Subsequent to the Hydro One IPO in November 2015, Hydro One no longer pays PIL of corporate income tax to OEFC. Under the Electricity Act, 1998, provincial corporate taxes payable by Hydro One Inc. are due and payable by the Province to OEFC.
- DRC paid by electricity consumers.
- Electricity sector dedicated income – the Province’s combined cumulative net income from OPG and Hydro One in excess of the Province’s interest cost of its investment in these subsidiaries is allocated to OEFC, by the Province at its discretion.”
While they can re-label these payments as “taxes”, or “Gross Revenue Charges”, or re-direct how the money is routed, and/or re- classified, the debt is real, and after 19 years of payments, it still totals over $20 billion. Currently the burden to repay this debt is on the citizens and companies of Ontario. I just hope we don’t become a party to this lunacy by letting Avista be sold to a foreign entity. What do you think?