First Nations to decide on Hydro One sale with a billion dollar potential
OHSWEKEN — Six Nations has a big decision to make in the coming weeks: should they join hands with other First Nation communities in Ontario to become shareholders in Hydro One.
The sale of shares to First Nations across the province was introduced by Premiere Kathleen Wynne after Ontario Regional Chief Isadore Day objected to First Nations being excluded from Wynne’s 2015 announcement to partially privatize Hydro One — offering 60% ownership to the private market.
A 2.5% slice of that 60% was opened up collectively to Ontario’s First Nations communities in 2016 when the Chiefs of Ontario announced an agreement-in-principle with Hydro One.
The plan? Liberals promised to open up 15 million shares to Ontario’s First Nations communities at a reduced rate of $18 a share — that’s about three quarters of the standard share rate of just under $24.
Regional Chief Isadore Day called the deal a “modern political accord”. Day said, “Having meaningful equity participation in Hydro One is a unique long-term wealth creation opportunity for our collective First Nations. More significantly, we now have the opportunity to secure our rightful place not only in the energy sector but in the economy as a whole.”
According to stats released by the Chiefs of Ontario the deal has long term potential to increase to $1.2 billion dollar value over 25 years.
A Chief’s Committee on Energy with the Chiefs of Ontario was established with representation from First Nations reserves across the province to work out the details of this proposed agreement. Six Nations Elected Chief Ava Hill was a part of that committee as well as Six Nations Phil Montour.
Recently some buzz on social media led community members to be concerned about the deal. In addition to public meetings, Six Nations Elected Council opted to using an online survey to get feedback on what community members thought about joining onto the LP.
Hill says that survey was just one tool to collect feedback on the proposed purchase and was not a public vote. Ultimately the decision of voting yes or no to the deal lay on the shoulders of Six Nations Elected Council.
That decision is not unique to Six Nations of the Grand River. First Nations Elected Councils across the province are considering this as well. The Mohawk Council of Akwesasne Grand Chief Abram Benedict was also part of the team to negotiated the terms of the agreement. He has posted a 30 minute video to the MCA’s YouTube channel giving particulars of the proposed agreement for his community to consider.
Here are the facts.
First, in order for the deal to go through at all 80% of the First Nations communities in Ontario have to come on board by the end of 2017.
Next, if a base threshold of 80% of First Nations communities in Ontario are in agreement, which Hill says is just 107 of the 133 communities, the deal will be finalized. However, if 106 say yes and 27 refuse – Hill says the deal will not proceed.
If ratified, the First Nations who agree will start a limited partnership, called Sovereignty Wealth LP, to collectively hold the shares. Ontario will then give that LP a 25 year loan of up to $268 million dollars for the purchase of the shares.
Finally, in addition to the loan the province is offering $45 million dollars for seed capital over the course of three years. You can almost think of it as the “free gift with purchase”. The Chiefs of Ontario have agreed to bank that seed money to collect interest as an investment into the future generations.
Hill says profits will not come to any community for the first five years, but once they do start flowing through will mirror the dispersion model of Ontario First Nations Limited Partnership (OFNLP) dollars from OLG. Currently that is a percentage based on population, a base amount for participation and a 10% bonus for those in remote communities.
A holding of 2.5% for the nearly 210,000 First Nations people in Ontario might not seem like a sizeable piece of the pie. However, if you consider the Ontario government will retain 40% ownership— and has legislated that no other shareholder or group of shareholders is allowed to own more than a 10% holding — it seems like it is a reasonable offer.
Provincial officials have said the offer is one step they are taking to make steps forward toward reconciliation with Ontario’s First Nations. Minister of Energy Glenn Thibeault says First Nations’ participation in the energy sector is a priority for the Province. “This new agreement-in-principle is transformational and unprecedented, and reflects the spirit of the Political Accord in strengthening Ontario’s relationship with First Nations,” said Thibeault.
Indigenous Affairs Minister David Zimmer said “facilitating an opportunity for First Nations to participate in the broadening of ownership of Hydro One, this agreement-in-principle reflects Ontario’s strong commitment in supporting Indigenous communities to shape their own economic future.”