TORONTO, February 12, 2018 – The Honourable J. David Wake, Ontario’s Temporary Financial Accountability Officer, has released a report that provides an updated financial analysis of the partial sale of Hydro One.
The Province completed its final sale of Hydro One shares in December of 2017 and generated an estimated $9.2 billion in proceeds by selling 53 per cent of Hydro One. The FAO’s report includes an updated estimate of the fiscal impact of the sale, analyzes how much capital the Province raised, reviews how the sale proceeds are being allocated, and discusses how the sale could affect electricity prices in Ontario.
The FAO estimates that the partial sale of Hydro One improved the Province’s annual surplus / (deficit) by a total of $3.8 billion over the fiscal years 2015-16 to 2017-18. However, for the fiscal year 2018-19, the annual surplus / (deficit) is expected to deteriorate by $1.1 billion as a result of the partial sale and then cost the Province an average of $264 million each year from 2019-20 to 2024-25.
Over the long-term, the FAO reviewed the fiscal impact to the Province of selling Hydro One compared to issuing debt to finance an identical amount of infrastructure investment. Starting in 2028-29, the FAO estimates that provincial net debt will be higher due to the partial sale of Hydro One. Using a different measure, on a discounted cash flow basis, the FAO estimates that the partial sale of Hydro One will cost the Province $1.8 billion, when compared to the alternative of financing an equivalent amount of infrastructure investment by issuing traditional debt.
To learn more about the impact of the partial sale of Hydro One, click here for the FAO’s report.
About the FAO
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. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.