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Simon Doyle.

Fred Lum/The Globe and Mail

Simon Doyle is a reporter based in Ottawa who specializes in lobbying and public affairs. Follow him on Twitter @sdoyle333.

The Ontario government is throwing cold water on a proposal by a distributors group to split up and sell half of Hydro One Inc. as unions step up their opposition to privatization and last-ditch lobbying efforts intensify.

Ontario Premier Kathleen Wynne will soon say whether the government will keep Hydro One separate or whole as companies and groups lobby on the government's review of potential asset sales related to the electricity provider, a government-owned corporation that runs most of Ontario's electricity transmission and distribution, serving about 1.4 million customers.

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Former banker Ed Clark, Ms. Wynne's adviser on a government asset review, is making final adjustments to his recommendations before presenting them to the Ontario cabinet in a couple of weeks.

Brookfield Asset Management Inc., the Ontario Chamber of Commerce and pension fund OMERS are among the organizations registered to lobby on Mr. Clark's asset review.

Industry sources said the government will release its decision in its 2015 budget. Further details on any moves toward privatization may be put forward through a request for proposals.

The Electricity Distributors Association, an association representing more than 70 regulated electricity distribution companies in Ontario, almost all of them municipally owned, is proposing to hive off Hydro One's distribution business through a purchase by its municipal members, leaving Hydro One's transmission assets with the government.

The Ontario government quickly played down the proposal, releasing a letter dated Feb. 23 from Energy Minister Bob Chiarelli to the EDA, that said the idea "does not appear to completely align with the objectives of the province."

Ms. Wynne plans to raise cash from government assets to help fund a $29-billion infrastructure program for the province, including funding for roads and transit. Mr. Chiarelli wrote in the letter that the proposal does not "ensure maximum return" for the government or minimize potential impacts on customers' electricity rates.

The EDA's original proposal was made in private last year to Mr. Clark's asset review panel. The panel recommended last fall to sell Hydro One's distribution arm to the private sector, leaving the transmission side with the government.

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More quietly, another proposal has emerged amid Bay Street lobbying. Investors are supporting a more recent proposal that the Ontario government sell a 10 to 15 per cent stake in Hydro One through an initial public offering, raising more than $1-billion for the government based on Hydro One's estimated value of more than $15-billion.

OMERS, as well as electricity distribution companies Enersource Corp. and PowerStream Inc., have expressed an interest in buying into Hydro One. OMERS approached the government early with a proposal to merge Ontario's small, local power distribution companies into fewer, yet bigger companies, with financial backing and potential ownership from the pension fund.

At the same time, unions are also becoming more vocal in their opposition to any privatization.

Electricity union the Society of Energy Professionals, representing more than 8,000 electricity professionals in Ontario, is planning more public campaigning after running radio ads in Toronto this month under the theme "keep hydro public." The union ran similar local radio ads in this year's Ontario by-election in Sudbury.

Union president Scott Travers said proposals to sell off assets or privatize parts of Hydro One should be sounded out in more public venues like the Ontario Energy Board.

The Canadian Union of Public Employees is supporting the union's campaign and there are talks to expand it with help from some community and environmental groups, Travers said. "Poverty groups, labour groups, environmental groups are all interested in what's happening," he said.

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Similarly, the position of the Power Workers' Union is to keep Hydro One whole.

Charlie Macaluso, chief executive of the EDA, said the association took its proposal public because of increased media attention on Hydro One. The group has the support of the Association of Municipalities of Ontario, and under its revised proposal, local distributors would consolidate voluntarily. The EDA is not necessarily opposed to offering market value for Hydro One's distribution arm, Macaluso said.

"We've had some positive discussions with some potential, third-party pension plans that might participate in our plan," he said.

Mr. Clark's panel is also considering a proposal to provide a three- to five-year tax holiday for companies that consolidate. The Ontario Energy Association, representing larger utilities, has been lobbying for the government to lower these tax barriers to reduce future costs and encourage private investment in infrastructure upgrades.

The Ontario government says it will retain an ownership stake in Hydro One and that electricity rates will continue to be set by the Ontario Energy Board.

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