(WINDSOR, ON) – Cities across Canada should sell their electricity distribution companies and invest the proceeds in critical municipal infrastructure, according to a new CD Howe Institute report.
In Surge Capacity: Selling City-owned Electricity Distributors to Meet Broader Municipal Infrastructure Needs, author Steven Robins demonstrates why there is no compelling public policy rationale for municipalities to hold these assets.
“There’s huge potential in Ontario and Alberta for cites to hold equity sales in electricity distribution to jumpstart other infrastructure investments,” said Robins. “Regulators have demonstrated their ability to protect consumer interests, by setting the rates for both municipally and privately owned electricity distribution.”
Windsor’s EnWin provides electricity to hydro users across the city. Annually, it provides a bonus of about $4 million to the city. Robbins thinks this asset could be offloaded by the city selling, “… part of their equity stakes in electricity companies … and invest the proceeds in more critical municipal infrastructure needs.”
The author points out that the current tax structure distorts incentives for municipalities, encouraging them to retain ownership. Robins advocates for the province to eliminate or rebate to cities punitive taxes on electricity company sales.
The federal government should remit back to provinces any corporate income tax they receive from newly taxable electricity companies, provided the selling government reinvests the proceeds in new infrastructure.
Robins would like to see the money invested in transit. Windsor is the only major city in Ontario, west of Toronto, not involved in a fixed path rapid transit system.