Canadian Labour Reporter

on April 14. The unusual arrangement — detailed in documents obtained by independent energy and envi- ronment advisor Tom Adams and provided to Canadian Labour Re- porter — was made public shortly after Premier Kathleen Wynne announced 60 per cent of Hydro One would be sold to fund the government's transit infrastruc- ture plan. OPG involvement A similar offer has been extended to Ontario Power Generation (OPG) employees represented by PWU in their respective tentative agreement, according to media reports. These agreements, Ad- ams said, amplify the uncertain- ties about privatization. "The proceeds that net back to the Ontario government from the sale of Hydro One, irrespective of how those proceeds are distrib- uted — debt reduction, transit, whatever — the proceeds will be impaired by the terms of the la- bour agreement," he said. It is still unclear at what price point the shares will be trans- acted, Adams said, and it is also unclear how many shares will be floated. And because it would not be unreasonable to assume other unions representing employees at Hydro One or OPG could negoti- ate similar deals, it is difficult to estimate exactly how much of the company the workers could even- tually own. So while the immediate results of the agreement — including concessions to a costly pension plan — are clear, the long-term ramifications are more difficult to calculate. Adding to the uncertainty is the unpredictability of investing. According to Muneeza Sheikh, partner at Levitt & Grosman in Toronto, the onus is on the union to ensure employees are aware of the risks associated with the pos- sibility of plummeting shares. "At the end of the day," Sheikh said, "the union and OPG and Hydro One have the right through the ratification process to come to a deal that suits them. With that being said, it is an odd deal, es- pecially since it seems that OPG workers are going to be gaining stock in a company that they don't even work for." Adams agreed the inclusion of OPG employees was unusual. "One of the reasons to com- pensate workers with stock of the company they're working in is to give them an incentive to see the world from the point of view of their employer, to align the inter- ests of the workers and the cor- poration so that they can work in harmony with each other," he said. "But paying workers at com- pany B with stock of company A doesn't achieve some of those ob- jectives… What did they hope to achieve by it?" The PWU declined to com- ment on the tentative agreements. Jennifer Beaudry, spokesper- son for the minister of energy, Bob Chiarelli, however, said the min- istry is "excited" PWU leadership expressed support for the govern- ment's plan to strengthen Hydro One through partial privatization. "We're pleased that a tenta- tive net zero agreement has been reached between the Power Workers' Union and employers," Beaudry said, "and that workers are interested in becoming own- ers in the new Hydro One." "Net zero" refers to the con- tract's wage hike and shares being offset by savings elsewhere in the contract. The biggest contribu- tion to the claim of a net zero con- tract is likely the negotiation of concessions to the pension plan. Pension payments The tentative agreement would see the average of workers' three highest-paid years of service used to calculate pension payments, down from the current five. Ad- ditionally, employee pension contributions will be increased in each year of the agreement. Adams, however, said not enough information has been made public to allow for indepen- dent verification of the net zero claim. "There's a whole host of finan- cial regulation related to pension administration and there may be aspects of the pension adminis- tration rules that play into this," he said. Furthermore, Adams said, reg- ulations relating to a public utility will also play a part. "Both OPG and Hydro One have drawn the ire of the Ontario Energy Board related to their compensation packages or com- pensation liabilities," Adams said. "Now that we're adding to that cocktail of compensation by add- ing a new category of payments in the form of this stream of share grants, we have no precedent for how the Ontario Energy Board considers the share grant ben- efits when evaluating… We don't know what the ratepayer implica- tion of that compensation will be." Independent parties such as Adams will likely have to wait a while longer before more infor- mation becomes available. The parties directly involved — including PWU — continue to decline to comment, citing the upcoming ratification vote. The first ratification meet- ing for the union's membership at Hydro One was scheduled for May 3. The next is slated for June 19. According to the tentative agreement, ballots will be count- ed on July 3. 7 Canadian HR Reporter, a Thomson Reuters business 2015 CANADIAN LABOUR REPORTER news Photo: Christinne Muschi (Reuters) < from pg. 1 'Net zero' deal offsets wage hikes Details of the tentative agreement between PWU and Hydro One became public shortly after Premier Kathleen Wynne announced 60 per cent of the electric utility would be sold to fund the government's transit infrastructure plan. Some unions, including CUPE, are fighting to prevent the partial privatization.

• Cover