Ontario to sell off 60% of Hydro One, allow beer in grocery stores
Premier Kathleen Wynne says government will retain majority ownership of utility
Ontario's Liberal government will try to raise money for transit and infrastructure by selling off a large chunk of Hydro One and opening up the way beer is sold in the province.
The government will also bring in a new beer tax.
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Announced Thursday, the moves stem from a report commissioned by the province aimed at squeezing more revenue from government assets, such as the Liquor Control Board of Ontario (LCBO) and Hydro One, the province's electrical transmission utility. The sale of Hydro One is projected to raise $4 billion.
Premier Kathleen Wynne said despite the sell-off of Hydro One, Ontario will remain its largest shareholder, with no other shareholder allowed to control more than 10 per cent of the company. She also said the government will have the power to name the majority of members to its board, including the chair, and have the right to dismiss the board.
"The government would retain de facto control," said Wynne.
Hydro One chair and former Liberal cabinet minister Sandra Pupatello will soon be succeeded by David Denison, former president and CEO of the Canada Pension Plan Investment Board.
The moves come ahead of the provincial budget, which is set to be released on April 23.
The province will also sell off Hydro One Brampton and merge it with three other local electricity companies, covering Hamilton, Mississauga, Vaughan, Markham, Barrie, and St. Catharines. The move will create the second largest hydro distributor in the province.
Ontario's opposition parties have warned that a sale of Hydro One will drive up electricity prices, something the Liberals warned would happen when the Tories wanted to privatize it in 2002.
Retaining majority ownership
Premier Kathleen Wynne said Wednesday the government would retain majority ownership and would make sure consumers are protected against price hikes, though she wouldn't guarantee prices won't rise.
"My hope is that by making these changes we will have a better company, we will have a better and more efficient distribution system and that as a result of that we will see that there's control of hydro rates within the system," Wynne said.
"I can't guarantee that, but ... there are improvements in distribution that should provide downward pressure on prices."
NDP Leader Andrea Horwath said it's unbelievable that prices won't "skyrocket," and her party banged their desks in protest in the provincial legislature for nearly half an hour because Wynne wasn't there to answer questions about the proposed asset sales.
A statement from interim Progressive Conservative Leader Jim Wilson said the Liberals should devote money earned from the Hydro One sale to retire the company's $27-billion debt.
"The cost of that debt will show up on the hydro bills of every family in the province," said Wilson in a statement.
Changes to how beer is sold
The panel also recommends that Ontario expand beer sales to about 450 supermarkets.
There were reports the government was planning to allow the sale of wine in grocery stores, but it now appears that change won't come right away.
The government will continue to own the LCBO, but will make drastic changes to the way the Beer Store, which is owned by a trio of large foreign breweries, is operated.
"The Beer Store has grown into a de-facto monopoly controlled by a small number of companies," said Wynne. "When it comes to the sale of beer in Ontario, I'm here to announce that the status quo is over and that the days of monopoly
The changes to how beer is sold in Ontario will include:
- Up to 450 new retail locations authorized to sell beer in "urban population centres" across Ontario. The government says this is roughly equal to the number of Beer Store outlets in the province.
- A new beer tax that will raise $100 million a year. The tax will eventually reach one dollar per 24 pack of beers, but brewers of the bestselling brands are barred from upping their prices for two years. Prices of the most popular brands will be capped for two years. After that, price increases will be capped to the rate of inflation.
- Moves to make Ontario craft beers more available in Beer Store locations including improved placement, more shelf space and marketing.
- 12-packs will be sold at LCBO stores on a trial basis. Before, 12-packs were only sold at Beer Store locations.
- A new beer ombudsperson appointed to handle complaints from brewers and customers.
- The Beer Store will spend $100 million over four years, mostly to enhance the customer experience at its bare-bones retail outlets.
- An expansion in the number of products available at the Beer Store.
The Liberals call their changes to alcohol retailing the biggest in the province since prohibition was repealed in the 1920s.
With files from The Canadian Press