Warning message

Please note that this page is from our archives. There may be more up-to-date content about this topic on our website. Use our search engine to find out.
Only a dim bulb would privatize Toronto Hydro, according to economist and utilities expert Dr. Myron Gordon.

Toronto Hydro workers asked Gordon to study whether the city and its taxpayers would benefit more from selling the utility or keeping it public. The workers, members of CUPE 1, are waging a campaign to ward off the privatization of the newly-amalgamated Toronto Hydro. Gordon, a professor in the University of Torontos Faculty of Management, concluded that maintaining public ownership is the best choice.

Gordon found that Toronto Hydro, owned debt-free by the city, is a tremendous asset providing a good return to the city. Even if funds from the utilitys sale were invested in a portfolio of securities, only with unrealistically optimistic assumptions would the return to the city be the same.

He argued that if privatized, the quest for ever-greater profits would supplant performance and service to customers as a primary objective. Customers would also get hit in the wallet. Based on evidence from the United States, privatization would result in higher electricity rates for residents and other smaller users and lower rates for large users such as industry.

In addition, local citizens would lose control of their electrical services, as privatization could easily result in Toronto Hydro becoming a small subsidiary of a large, probably foreign, conglomerate. Foreign ownership adds to the possibility that rates would rise as a result of transfer pricing (the pricing of services provided by the parent company to Toronto Hydro, as well as the energy sold to it).

Finally, Gordon argued city ownership is likely to add less to cost and confusion than a privatized Toronto Hydro facing the temptation to profit from a new and varied range of pricing options.