Robert Benzie and Paul Vieira
National Post
April 24, 2002

TORONTO – A landmark court ruling that blocks the sale of the Hydro One power utility has left Ernie Eves, the new Ontario Premier, struggling to determine a course of action as his Conservative government fends off criticism it is indecisive.

Observers were puzzled yesterday by the fledgling administration’s apparent inability to decide whether to appeal Friday’s Ontario Superior Court decision preventing the Hydro One privatization or to amend provincial legislation enabling the largest initial public offering (IPO) in Canadian history to move forward.

"It’s been kind of quiet, to tell you the truth" said one Bay Street insider in reference to the lack of information the government is relaying to the group of investment dealers who will participate in the sale of Hydro One shares.

He said most of the dealers involved are waiting for Mr. Eves’ next move – but are not expecting a snap decision.

"I suspect they’ll take their time on this," the insider said, "because this has gotten very political now, with Dalton McGuinty [the Liberal leader] giving speeches and Howard Hampton [the NDP leader] running around with billboards across the province."

Within Mr. Eves’ administration there are concerns about the lack of urgency in dealing with an issue that could make or break the Conservative government’s fiscal planning.

"The longer the decision is put off, the greater effect that it will have on the government. If we put the sale off too long it could potentially hinder our ability to use any proceeds of the sale to balance the budget," said one government official.

Given a projected revenue shortfall of up to $5-billion this year, the Conservatives have been counting on the Hydro One IPO to ease its financial worries. While the proceeds of the sale are earmarked to pay down the "stranded" debt of the old Ontario Hydro monopoly, the infusion of cash from the IPO could help the government stave off a budget deficit this year.

The new Premier has indicated he will not make a hasty move.

"This is a matter of great public importance that requires very careful consideration regarding next steps," said Barry Wilson, a spokesman for Mr. Eves.

"The Premier has asked his Attorney-General [David Young] to review this very recent decision in detail and to provide him and Cabinet with options."

Another government insider said a few days’ delay should not have a significant impact on the sale.

"It will be later this week. Whether they come to a decision today or later this week is not going to make that much of a difference," said the official.

Mr. Hampton, for his part, said Mr. Eves is being cautious because he has inherited a political minefield from Mike Harris, the former premier.

"If they want to proceed, they’ve got to do one of two things: They have to either appeal or they have to bring legislation to the floor of the Legislature," said the NDP leader, noting either option is fraught with dangers for the government.

"The problem with an appeal is it would probably take at least a couple of months to have an appeal heard. There’s no assurance they would win the appeal because they put in very weak evidence at the trial. The problem with bringing in legislation is that it gives this issue the public and political profile that this government has tried to avoid from the very beginning," he said.

Mr. Justice Arthur Gans’s decision, which ruled in favour of an application from the Canadian Union of Public Employees and the Communications Energy and Paperworkers that the provincial Electricity Act did not empower the government to sell its electricity transmission grid, blindsided the Conservatives, Mr. Hampton said.

Mr. McGuinty, meanwhile, has written to the Ontario Securities Commission, asking the regulatory body to stop the Hydro One sale.

Tom Adams, executive director of Energy Probe, urged Conservatives to counter the Opposition leaders’ charges.

"They’re not demonstrating a lot of leadership. They need to respond to Hampton and McGuinty in terms of their claims [of the negative impact of the Hydro One sale]," Mr. Adams said.

With the opening of the market slated for May 1, homeowners and businesses will be able to buy their electricity from whomever they choose.