National Post
July 30, 2002

Concerns over the remuneration of Eleanor Clitheroe, the former Chief Executive Officer of Ontario’s electricity distributor, Hydro One, are not unfounded. Last year, Ms. Clitheroe earned $2.18-million in salary for running the public company. According to the government, she also billed $330,000 for limousine service over three years, joined seven clubs at public expense, and used $40,000 of Hydro One funds (only recently repaid) to renovate her house. In short, she received opulent and arguably excessive rewards from the public purse.

But it is equally arguable that Ms. Clitheroe has been made a scapegoat for the woes and wimpishness of the Ontario provincial government. While it is alleged that she took more perks than her contract permitted, the bulk of Ms. Clitheroe’s package was in the form of salary, and she can hardly be blamed for accepting it. Who wouldn’t? If her package was improperly big, the bulk of the blame belongs to the Hydro One board that offered it. Her compensation was also not out of keeping with private-sector salaries – and Ms. Clitheroe’s job was to steer Hydro One successfully into the private sector.

This brings us to the most important point: None of the present fuss would have happened had Premier Ernie Eves not botched the biggest privatization in Canadian history. The Premier cannot be blamed for the court decision that blocked the privatization plan, but he could have passed the necessary legislation and put Hydro One swiftly back on track toward the productive sector of the economy where it belongs. Instead, the government vacillated and finally performed a U-turn – deciding to sell only 49% of the company and thus to retain public sector control.

Mr. Eves should have stuck to the Tory guns and privatized Hydro One. Free from political interference, the company would have been free to raise capital, upgrade service and pursue new ventures inside and outside the province. Ultimately, it might have become an important player across the continent, generating billions of dollars in new revenue for its owners. Instead, it will be subject to the same shopworn and cumbersome political controls. Investors have received a slap in the face. And consumers, denied the $5-billion proceeds of privatization, will continue to finance the company’s $21-billion debt through a 0.7 cents-per-kilowatt surcharge.

Hydro One is now in worse shape than it was when privatization was first announced. Swift enabling legislation to regain the privatization momentum would have created controversy. But by seeking to avoid it, the Eves government has manufactured a crisis and eroded its credibility. Putting Ms. Clitheroe into the public stocks has proved a great distraction and served to distance the new premier from his predecessor, Mike Harris, but the people of Ontario deserved better.