1.03.11 - “Returning Hydro One dividend payments to families”
The Ontario government states that the dividends it gets from Hydro One are funding hydro rebates and credits; however, there is inconclusive evidence indicating that all these dividend payments are being returned directly to Ontario families. The promise is considered broken.
“The Tories’ 2018 election platform had said they would achieve the 12-per-cent cut by returning Hydro One dividend payments to families, paying for conservation programs out of general revenue, cancelling energy contracts and declaring a moratorium on new ones. They followed through with three out of those four measures but did not move on the Hydro One dividend, which they estimated at the time as $300 million to $400 million a year.”
The government receives 47% of Hydro One dividends, some of which are used to fund hydro rebates and credits. However, since the Ministry of Energy has not publicly disclosed the percentage of Hydro One dividends that are going directly to families, the promise remains in progress.
“[Energy Minister Todd] Smith’s office did not respond to questions from The Globe on the fate of the Hydro One dividend promise and the decision to run deficits while subsidizing electricity consumption.”
The government receives 47% of Hydro One dividends, which are then used to fund hydro rebates and credits, including the Ontario Energy Rebate, and other additional credits for individuals who earn low incomes, live on a reserve, or who are customers of certain hydro companies. The new Ontario Energy Rebate returns 33.2% of the subtotal of an electricity bill, compared to the previous rebate, which returned only 8%. Since most (but not all) households, farms, long-term care homes and small businesses became eligible for the Ontario Energy Rebate in November 2019, this promise is considered partially kept.
“When Hydro One’s board of directors declares a dividend on common shares, all shareholders of the company as of a certain date are eligible to receive a dividend based on the number of common shares they own. Ontario owns approximately 47% of Hydro One shares. In the fiscal year 2019-20 Ontario received $291 million in dividends from Hydro One. This equals approximately $60 per electricity customer that benefits from rebates or credits on their bill, in 2019-2020.”
“Effective November 1, 2021, the OER is providing eligible consumers with a 17% rebate from the province on the subtotal of their electricity bill. Consumers that are currently receiving the OER under the grandfathering regulatory provisions will continue to receive the rebate until October 31, 2022. When the OER was introduced, a grandfathering period was put in place for consumers that were previously receiving the 8% rebate as of October 22, 2019, if they met prescribed requirements to provide notice to their electricity vendor before February 1, 2020. […] The Hydro One dividend supports programs to keep your bill low. The Province of Ontario is Hydro One’s largest shareholder and receives a quarterly dividend that directly supports Ontario’s electricity rate relief programs, credits and rebates. When Hydro One’s board of directors declares a dividend on common shares, all shareholders of the company as of a certain date are eligible to receive a dividend based on the number of common shares they own. Ontario owns approximately 47% of Hydro One shares. In the fiscal year 2019-20 Ontario received $291 million in dividends from Hydro One. This equals approximately $60 per electricity customer that benefits from rebates or credits on their bill, in 2019-2020.”
“The government is already spending about $4 billion per year to subsidize hydro rates. Industry estimates suggest a further 12 per cent drop for residential users would cost at least $800 million per year. The PCs had hinted they would partially fund this by using the dividend from the government’s shares in Hydro One. That money — roughly $240 million per year so far — has been spent on other things.”
This promise is not yet rated because the dividends that the province receives from Hydro One currently go to general revenues as well as to the Ontario Electricity Financial Corp., rather than to Ontario families.
“During the campaign, the Progressive Conservatives said they would be able to redirect the $1-billion in dividends and taxes paid by Hydro One from the government to ratepayers in order to reduce their hydro bills. However, that money currently goes to general revenues as well as to the Ontario Electricity Financial Corp., which finances the province’s long-term power-related debt.”
“Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. […] In the 2015 Ontario Budget, the government of Ontario (the Province) announced its intention to sell up to 60 per cent of Hydro One. In December of 2017, the Province completed its final sale of Hydro One shares, generating an estimated $9.2 billion in proceeds by selling only 53 per cent of Hydro One.”