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KEEP TORONTO HYDRO PUBLIC - BRUNO SILANO
(This article is from the May 16-31/2000 issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, 706 Clark Drive, Vancouver, Canada, V5L 3J1.)
"I firmly believe that the hydro privatization issue could be the turning point on this whole privatization agenda, from health care to education to water services. We think that if we win the fight with utilities, it will give a big boost to keeping services public throughout the province." - Bruno Silano
The Ontario Tories have made deregulation and privatization their watchwords, starting with the break-up and sale of Ontario Hydro. Now, they are pushing to sell profitable municipal utilities like hydro and water filtration operations. Many municipalities see hydro privatizations as a quick-fix solution to their financial crises. "For Sale" signs are appearing on municipal hydro utilities across Ontario.
Some large transnational corporations want a toe-hold in this lucrative sector. These include the US-based Utility Corp. which currently leases Lindsay Power, the Houston-based Enron, and AEP Resources (American Electric Power), one of the largest coal producers in the US. Water filtration and treatment systems are being studied by the French transnational Suez-Lyonnaise, and by Southern. Laidlaw and the newly created Ontario Hydro Services Company are angling for disposal services and much more.
Even worse, an announcement is imminent that the Bruce nuclear power station has been bought by a British-US consortium.
The transnational Acres Management has been very active around Toronto Hydro. Acres is the owner of the Toronto District Heating and Cooling Corporation, whose new President is Dennis Fotinos, a former Toronto City Councillor. Fotinos also sat on the Board of Toronto Hydro until Bruno Silano helped shed some light on the push to privatize in Toronto.
What follows is part of a People's Voice had conversation with Silano, President of CUPE Local One, the 1,500 Toronto Hydro Workers who are campaigning to stop the Tories in their tracks.
Bruno Silano: Privatization started for us once the government passed Bill 35, in October 1998. That Bill among other things gave municipalities sole ownership of municipal utilities. They always did own their local Hydro companies, but this put it on a business-type footing in terms of shareholders.
Municipalities are facing financial pressures because of provincial downloading, because their infrastructure is starting to crumble after years and sometimes decades of neglect and abuse. It's now to the point where the politicians on these municipal Councils have to do something.
One of the ways they are looking at resolving the funding crisis is to sell off, in whole or in part, their municipal electrical utility.
This is what happened here in Toronto. A Councillor came out and stated that the City was upwards of $1 billion in debt; one way to offset that debt would be to sell Toronto Hydro, which conservatively is pegged at around $3.5 billion; and therefore let's privatize it and we can pay off our debt, we can fund social housing, TTC costs, maybe a tax cut for everybody...
Dennis Fotinos sat on Toronto Hydro's Board, and also on Toronto District Heating and Cooling's Board of Directors. On top of that he was working for Acres Management - a large multi-national corporation (which) stands to make millions of dollars from the privatization and restructuring of the utility industry. It was a clear conflict of interest, which our Local shed light on. He ended up leaving, and he's now Chair of the Toronto District Heating corporation. Which by the way was an increase in pay from $80,000 to over $120,000!
The Mayor was initially against privatization. He was quoted as saying "well if somebody wants to buy it, that tells me we should keep it." The next day he was all for selling it, a typical Lastman flip-flop. That forced the Local to hold a press conference. We said that selling Toronto Hydro is a very short-sighted view for the citizens of Toronto... There will be other funding crises down the road, and once you've sold it off, you can't get it back. We've seen what happened in Britain and New Zealand.
Once the right-wing governments are pushed out and we get a more progressive government, you can restore funding to social programs, but the private sector won't necessarily want to relinquish their ownership of an asset such as a hydro company, or a water plant.
If Toronto Hydro was sold for $3.5 billion, the private sector would want at least $10 billion. The City just doesn't have that kind of money lying around.
We also formed a Public Power Committee within the Local, which had a dual focus. One was to educate our own members about privatization - and it is somewhat complicated... We wanted to bring very simple and concise arguments to the workers. The Committee distributed our Local's Bulletin. We produced buttons and stickers for our members...
The Committee was also responsible for developing a public campaign. The primary target was City Council. The 57 Councillors and the Mayor had to be convinced to not sell Toronto Hydro.
This is a huge fight. There are billions of dollars at stake, huge forces of capital here: from America, from Europe, some working in tandem trying to purchase this utility. And it's a fight that Local One with its 1500 members cannot win alone.
We tried to inform other labour groups, and also to build up a coalition with environmental groups, ratepayer groups, seniors groups, you name it. We were really trying to cast a net as wide as possible to sell our position, which was to keep Toronto Hydro public.
After a Toronto Star poll showed that 90% of residents were not in favour of selling Toronto Hydro, the issue fell off, and Councillors got busy when the province cut the number of seats on Council from 57 to 44.
In November, we have a new Council coming in. We're concerned that some of them will run on a platform of selling Toronto Hydro. Or we could have a Council elected that are ideologically pro-privatization, that say government shouldn't be involved in electricity or water, that sort of thing. We want to make sure that we have a Council elected that is progressive, socially-minded, and pro-public services.
Here's what concerns us: the rates are going to go up this year regardless, directly attributable to the government's deregulation legislation.
Part of that legislation (forces) the break up of the utility into a competitive section that will potentially sell you electricity, versus the other company - which they call "the wires" - just the wires overhead and the poles and so on.
To separate the company into two parts would be very expensive, and the Ontario Energy Board which now regulates municipal utilities has allowed up to a 10% rate increase (to cover it). So the rates are going up, whether we stay public, or whether we're privatized. The focus of the report will bear out that under private ownership, the rates are more likely to increase much faster.
One of the things we've tried to tell people is that the government has been very careful with their marketing of this strategy of deregulation of the electricity industry.
One way they do it is by saying "this will bring customer choice, just like it has in the natural gas market, just like it is in the long-distance telephone market." And we say, "it will bring customer choice, but understand which customer the government is referring to."
There are three customers in the local utility business. One is the local industrial and commercial customers such as the big bank towers, the large office buildings, and the industrial customers on the outskirts of the city and down by the waterfront.
We then have small business customers on arterial streets such as Dundas and Queen, Bloor and Danforth, Yonge Street. And we have residential customers.
When the government is speaking about customers having choice, in reality they are referring to the large commercial and industrial customers with electricity bills in the hundreds of thousands of dollars per month. They will benefit the most from deregulation, the ones that will be able to go out and shop around for power. Other electricity generators will offer them a good price for electricity because they have a high demand.
Residential and small business customers - as we've seen in other jurisdictions that have deregulated - face the brunt of this cost-shift.
The cost-shift is from the large commercial customers. Their prices, their savings are then going to be passed onto residential customers in terms of higher rates, because the utility will try to balance out their overall income...
(Part Two of this article will appear in our June 1-15 issue.)
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