Toronto Hydro buys city's hydro poles, lights

TORONTO, ONTARIO - Toronto has plugged a $60 million hole in its 2005 budget by selling the city's street lights and poles to Toronto Hydro — but electricity rates could increase as a result.

The city found some much-needed cash last spring during its budget deliberations when it hit on the idea of selling city-owned lights and poles to Toronto Hydro, which is owned by the city.

Unfortunately, no one knew exactly how many poles the city owned, or how to value them. That left the budget with a pencilled-in revenue figure, subject to verification. The number of poles was estimated at 80,000, but estimates of the value varied wildly.

One city official said a single pole could cost up to $5,000; an Ontario Energy Board decision pegged the value of a pole at $478.

City staff estimated the value of the lights and poles at anywhere from $40 million to $60 million, but no firm figure was available.

Councillor David Soknacki, the city's budget chief, confirmed that the city and hydro have agreed on a figure at the high end of the scale.

"I like to think the story has a happy ending," Soknacki (Ward 43, Scarborough East) said in an interview.

"The way I understand it is that Toronto Hydro has agreed to $60 million, Toronto city council has agreed to accept $60 million, and the staff on both sides are now undertaking the administrative papers to make that happen."

Toronto Hydro refused comment but it's likely the utility will apply for permission to recover the cost of the purchase through its rates. Regulated utilities are entitled to recover their costs and earn a return on assets.

Tom Adams, executive director of Energy Probe, said the Ontario Energy Board should take a close look at the transaction.

Since Toronto council is in effect Toronto Hydro's sole shareholder, the transaction is not an arm's-length deal, he said in an interview.

"There's a danger of back-door taxation," Adams said.

He added that the city shouldn't be drawing money out of Toronto Hydro to pay for a wide rage of municipal services, he said.

"Electricity ratepayers oughtn't to be paying for parks services or cleaning up garbage," he said.

"They ought to be paying only for electricity."