Fair Hydro Trust (the Trust) is a special purpose trust established as the financing entity contemplated by the Ontario Fair Hydro Plan Act, 2017 (the Act). On November 1, 2019, the Government of Ontario’s Fixing the Hydro Mess Act, 2019 (being the Act as so amended, referred to as the Fair Hydro Act) came into effect. The General Regulation made under the Act was revoked effective November 1, 2019.
Under the Fair Hydro Act, the Province of Ontario (the Province) is responsible for paying existing funding obligations of the Trust, including principal repayments. Ontario Power Generation Inc. (OPG) continues as Financial Services Manager but is responsible for paying the operating costs of the Trust. The Trust is prohibited from incurring further funding obligations.
Prior to May 9, 2019, the purpose of the Trust was to reduce electricity bills for eligible consumers (Specified Consumers) in the Province by refinancing a portion of costs over a longer period of time (Global Adjustment). Pursuant to the Act, effective May 1, 2017, the Independent Electricity System Operator (IESO) began to defer the collection of a portion of the Global Adjustment costs. The Act allowed the IESO to transfer a portion of the deferred balance to a financing entity that would fund the deferral in exchange for an irrevocable right to recover the balance and associated financing and other costs from Specified Consumers in the future (Investment Interest). In order for the Trust to finance the Investment Interest acquired from the IESO, it incurred senior debt from capital markets and subordinated debt from OPG. These obligations are now the responsibility of the Province effective November 1, 2019.