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Tentative deals with Ontario Power Generation and Hydro One employees, both represented by the Power Workers’ Union, would give employees a 3-per-cent-wage increase over three years, plus payments equal to 3 per cent of their annual salaries.

Tim Fraser/The Globe and Mail

Ontario's Liberal government is trying to buy labour peace before the controversial privatization of Hydro One with generous contract settlements offering power workers stock in the company, a raise and a cash payment.

Tentative deals with Ontario Power Generation and Hydro One employees, both represented by the Power Workers' Union, would give employees a 3-per-cent-wage increase over three years, plus payments equal to 3 per cent of their annual salaries.

OPG workers would also get Hydro One shares equivalent to 2.75 per cent of their salaries every year for 15 years; Hydro One employees would get shares equivalent to 2.7 per cent of their salaries annually for 12 years. The union agreed to some concessions, with workers paying more toward the cost of their defined-benefit pension plans.

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The deals, which run until 2018, have not yet been ratified or made public. But The Globe and Mail obtained internal PWU memos summarizing their terms. PWU contracts expired at the end of March.

The settlements come at a time when the province is supposed to be holding the line on its labour costs and looking to impose austerity in contracts with front-line public sector workers, including teachers.

Premier Kathleen Wynne is pushing ahead with a plan to sell 60 per cent of Hydro One to the private sector in hopes of raising $9-billion – $5-billion to pay down debt and $4-billion to spend on new transit construction. The sale will happen in increments, with the initial public offering of 15 per cent expected this year.

Privatization is contentious, with polls showing a majority of Ontarians support keeping hydro in public hands. Some unions, including the Society of Energy Professionals, have run radio ads that say the sell-off will drive hydro rates up. Both the PCs and NDP have blasted the move in the legislature, and the NDP has launched a petition.

The Power Workers' Union has been fairly quiet. Two weeks ago, when the government announced the privatization, PWU president Don MacKinnon provided a supportive quote for a government press release. He did not respond to a request for comment on Thursday.

Deputy Premier Deb Matthews, who is in charge of labour negotiations, confirmed the province had reached a deal with PWU. She said the settlement is a "net zero," meaning any increase in pay or benefits is offset by savings elsewhere in the contract.

But Ms. Matthews would not say exactly what those savings are, contending that she cannot discuss the deal until it is ratified. She would also not explain why the government cut OPG workers in on the stock options – OPG is a separate government agency that operates power plants, while Hydro One controls transmission lines and some local distribution.

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"I'm not going to comment on the deal. I'm not going to provide more details, other than to say it's net zero, it addresses [pensions] and it brings workers into partnership in the company," she said.

Progressive Conservative MPP Vic Fedeli said the deal was designed to placate union members and ensure they would not oppose the sell-off.

"It's obvious that the government is scrambling now, trying to sweeten this fire sale to make nice with everybody," he said.

NDP Leader Andrea Horwath said giving Hydro One stock to workers would cut the amount available for transit.

"Here we have the first commitment of the government to sell off shares, and it's not going to transit, it's not going to infrastructure. It's going to cut this deal," she said.

A Mainstreet Technologies poll released on Thursday found 60 per cent of respondents disapprove of selling a majority of Hydro One, and 77 per cent believe privatization will increase electricity prices.

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"People still have that sense that ownership of something matters, and that it has that value without really having an explanation for it," Mainstreet president Quito Maggi said in an interview.

Mainstreet polled 2,445 Ontarians using interactive voice-response technology on April 28. The poll is considered accurate to plus or minus 1.98 percentage points, 19 times out of 20.

The Liberals have tacitly acknowledged the antipathy. They refuse to use the word "privatization," opting instead for "broadening ownership" or "unlocking value."

And when Ms. Wynne announced the plan two weeks ago, she played up a more popular announcement made at the same time – allowing some grocery stores to sell beer – and played down Hydro One.

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