OPG employees to be paid in Hydro One stock

The “for sale” sign is barely up at Hydro One, but the Liberal government is already giving away shares.

About 5,500 unionized Ontario Power Generation employees will receive a portion of their pay in Hydro One stock as part a new contract settlement, the Star has learned.

It’s an unusual arrangement that comes in the wake of Premier Kathleen Wynne’s privatization czar Ed Clark’s recommendation to sell 60 per cent of the transmission utility to bankroll transit infrastructure.

Sources say members of the Power Workers Union employed by OPG — the province’s electricity generator — are being offered the shares in exchange making concessions to their lucrative pension plan.

Starting in 2017, the electrical workers will receive 2.75 per cent of their base salaries in Hydro One shares being sold as part of an initial public offering.

The shares will be paid out over the subsequent 16 years — even though the union accord is a three-year deal.

Power Workers Union officials would not discuss the settlement on Wednesday because it has yet to be formally ratified by members.

Ontario Power Generation brass also refused comment, directing inquires to the Ministry of Energy.

Energy Minister Bob Chiarelli stressed “it’s a win-win for both sides.”

“It’s a tentative ‘net zero’ contract. It’s compliant with our policies,” Chiarelli said, pointing to the government’s across-the-board wage freeze for public-sector workers.

“We’re very, very pleased that when we rolled out the initiative last week the leadership of the Power Workers Union was very supportive of the initiative,” he said of the Hydro One IPO proposed by Clark, the former TD Bank CEO.

Chiarelli insisted the pact should not adversely affect the amount of money the cash-strapped Liberals hope to make off the Hydro One sale.

“We expected the $9 billion to be realized — $5 billion is going to (Hydro One’s stranded) debt and the balance is going into the Trillium Trust,” he said, referring to the $4 billion earmarked for transit infrastructure.

“We have a business plan for the IPO and it’s a work in progress in the sense that it is being implemented at the present time.”

But Chiarelli wouldn’t say if the accord tackles OPG’s pension plan, which auditor general Bonnie Lysyk blasted in 2013 for being too lucrative because it’s funded at an employer-employee ratio of four or five to one.

“The tentative settlement . . . is very broad-based and deals with all of the important issues that we need to accommodate on both sides,” Chiarelli said.

In her December 2013 annual report, Lysyk complained “OPG’s pension plan is generous by any standard” so “human resource costs . . . have a financial impact on the cost of electricity.”

Clark, in his recent report urging the Hydro One sell-off (as well as allowing beer sales in 450 Ontario supermarkets), warned that “it is becoming increasingly unsustainable that this sector has pension arrangements that do not align with the public sector.”

Progressive Conservative MPP John Yakabuski (Renfrew—Nipissing —Pembroke) said the Hydro One share giveaway to OPG employees appears contradictory to the government’s line on the sale.

“You’re putting an asset up for tender and in the meantime you’re giving parts of it away as part of contract negotiations in the collective bargaining process?” said Yakabuski.

“It’s like putting a car up for sale, but in the meantime you’re selling the hubcaps and the wheels,” he said.

“It will be interesting to see what this means for Ontario electricity ratepayers.”

In the legislature on Wednesday, Wynne’s Liberals were under fire about the Hydro One privatization from both the Tories and the New Democrats.

“This premier has no mandate to sell Hydro One — that’s not stopping her,” said NDP MPP Peter Tabuns (Toronto—Danforth).

“It’s the wrong plan and Ontarians are going to pay the price,” said Tabuns.

Wynne defended her moves.

“Why are we doing this? We’re doing it because we need to invest in the infrastructure that is needed in the 21st century,” said the premier.

“That’s the roads, the bridges, the transit projects — all of that will not be done if we don’t make these choices.”

Hed here

60 per cent: of the transmission utility will be sold

$9 billion — How much the government hopes to make from Hydro One IPO

$5 billion — How much of the proceeds will go toward paying down Hydro One’s stranded debt

$4 billion — How much will go to the Trillium Trust transit infrastructure fund

2.75 — Per cent that an OPG employee’s pay will be in Hydro One shares

16 years — The length of the share payment scheme