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Hydro One - Initial Public Offering Implementation


Hydro One - Initial Public Offering Implementation

Ministry of Energy

The Hydro One Initial Public Offering (IPO) will be the first sale of shares to broaden ownership of the company to include members of the public.

Preliminary Prospectus

Before Hydro One can issue an IPO, it must file a preliminary prospectus with the Ontario Securities Commission (OSC) and other Canadian securities commissions for review. The prospectus includes details about Hydro One and the offering to help potential investors make an informed decision. Hydro One is expected to file an updated version of the prospectus in the coming weeks. This prospectus will then be used by financial advisors to market the offering. 

The Value of Optimizing Assets

Maximizing public assets such as Hydro One will allow the government to unlock value to make targeted investments in infrastructure projects. This is part of the largest infrastructure investment in Ontario's history -- more than $130 billion over 10 years, which will support more than 110,000 jobs per year on average with projects such as roads, bridges, transit systems, schools and hospitals across the province.

The Trillium Trust provides for the dedication of net proceeds from the sale of qualifying provincial assets to fund infrastructure projects that will create jobs and strengthen the economy to build Ontario up.

Governance Enhancements

The Province can nominate 40 per cent of the members of the Hydro One board. Board members must meet pre-defined qualifications that include independence, commercial experience, and commensurate expertise.

Hydro One Oversight

Hydro One Inc. is subject to requirements of the Business Corporations Act (Ontario)and the Securities Act (Ontario). This regime would continue to apply to Hydro One after the IPO.

The Province has required Hydro One to create a dedicated Ombudsperson, similar to those found at other public companies. The Ombudsperson will be able to receive and investigate customer complaints.

Electricity Rates

As is currently the case, Hydro One would have no role in setting electricity rates. Rates would continue to be set by the independent Ontario Energy Board (OEB).

Applications for electricity rates from companies like Hydro One are reviewed by the OEB and they - not the companies themselves - make the final decision.

As the new management team succeeds in strengthening the company’s performance, such efficiencies should be reflected in downward pressure on rates.

Governance Agreement and Legislative Provisions

The Ontario government would remain the largest shareholder and no other shareholder or group of shareholders will be permitted to own more than 10 per cent of the Company’s voting shares. In addition:

  • The Government of Ontario is prohibited by law from taking steps to reduce its common share ownership below a 40 per cent threshold.
  • Hydro One’s head office, Ontario grid control centre, CEO, and substantially all strategic decision-making management and functions must be maintained in Ontario.
  • At least 25 per cent of the IPO would be made available to individual and retail investors.  
  • Hydro One cannot sell all or substantially all of either the transmission or distribution assets regulated by the OEB.

Enhancements to the OEB

The Ontario Energy Board will continue to be responsible for reviewing and approving Hydro One’s rate applications. The government has also introduced legislation that, if passed, would provide the OEB with additional resources, including:

  • Enhanced compliance and enforcement powers by increasing penalties to companies that are not complying with the OEB’s rules and directions.
  • Enhanced ability to ensure reliability and continuity of service if distribution or transmission companies are unable to fulfil their license obligations.
  • Enhanced oversight for ensuring best practices on utility activities.

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