Government plan to sell Hydro One would run afoul of law, says legal expert

TORONTO, ONTARIO--(Marketwired - April 15, 2015) - The Ontario government's plans to sell all or part of Hydro One to pay for infrastructure is not only short-sighted, it would run afoul of provincial laws, according to a legal opinion released today at Queen's Park.

"Hydro One is a valuable public asset - something we all own together, that provides revenue to the government, and that in public hands provides stable, secure power to millions of Ontarians," said Fred Hahn, president of the Canadian Union of Public Employees (CUPE) Ontario. "Selling it would mean a loss of public control over our electricity network and significant costs for the public. To protect this vital public asset, we hired Steven Shrybman, a partner at Sack Goldblatt Mitchell, to prepare a legal opinion." Click here to read the legal opinion.

CUPE Ontario supports investing in badly needed infrastructure, but selling other vital infrastructure would be "selling the farm to feed the cattle," said Hahn.

Shrybman, who presented the legal opinion today, was counsel in a very important court battle in 2002, which challenged and successfully ended an attempt to sell Hydro One by former premier Ernie Eves.

The firm's legal opinion concludes there are reasonable grounds for challenging the sale of securities, debt or other interests in Hydro One on the grounds that:

1. "The government has no lawful authority to use the proceeds from such a sale to fund transit infrastructure, as it has declared its intention to do. Regardless of whether the sale itself is lawful, if the government fails to pay the net proceeds from any such sale to the Ontario Electricity Financial Corporation, it would be in breach of the explicit requirements of the Electricity Act;
2. "The government's professed reasons for authorizing a privatization of Hydro One (in particular, in order to fund transit infrastructure) are entirely extraneous purposes not authorized by the purposes of the Electricity Act;
3. "The exercise of a statutory discretion to privatize Hydro One could be challenged on administrative law grounds of unreasonableness or irrationality."

"As well, there is a very serious concern with respect to the impact of privatizing Hydro One, in light of Canada's obligations to foreign investors and service providers under international trade law," Shrybman said. "These may limit the government's future policy and regulatory options in respect of the electricity transmission and distribution sectors."

CUPE Ontario is calling on the Liberal government to immediately halt their plans to sell all or part of Hydro One and to not release a provincial budget using that sale as a cornerstone.

"We call on the Liberals to put the brakes on their sale," said Hahn. "We hope the Wynne government will see the danger of selling our hydro transmission and distribution systems and will agree with us that it would be a mistake. We are prepared to challenge a sale in court if necessary."

CUPE is Ontario's community union, with members providing quality public services we all rely on, in every part of the province, every day. CUPE Ontario members are proud to work in social services, health care, municipalities, school boards, universities and airlines.