Ward 13 · Infrastructure Accountability
Ottawa Finds $22 Million a Year. It Should Say So, In Writing.
Hydro Ottawa hands the City a dividend every June. It lands in general revenue, gets used for whatever council needs that year, and nothing on paper stops it from quietly absorbing LRT-related debt service. It should be earmarked, in a council-approved policy, for core infrastructure renewal — and explicitly walled off from the P3/LRT liability line.
Every June, Hydro Ottawa's board walks into council chambers, presents its annual report, and hands the City a cheque. It's treated as good news — and on its own terms, it is. But look at what happens to that money after the handshake, and the story changes from "the utility is healthy" to "the City has a discretionary slush fund with no name on it."
01 — The mechanismWhat the dividend policy actually says
Hydro Ottawa Holding Inc. is a private company, 100% owned by the City of Ottawa, created when the province forced municipal electricity utilities to incorporate under the Electricity Act, 1998. As sole shareholder, council sets the dividend policy. Since 2006, that policy has directed Hydro Ottawa to pay the City 60% of net income or $14 million, whichever is greater — and in 2016, council locked in a guaranteed floor of $20 million a year starting in 2017, specifically so budget staff could plan around a predictable number rather than a number that moves with storm damage and commodity prices.
It has worked, in the narrow sense that it delivers cash reliably. Cumulative dividends passed roughly $369 million by the end of 2023. The 2025 payment was $22.3 million; the 2026 payment, presented at the June 2026 Annual General Meeting, is $22.1 million.
The dividend has been a reliable annual transfer for two decades
hydro ottawa → city of ottawa, selected years, $ millions
Sources: CBC News (2016); Hydro Ottawa 2022 & 2023 AGM reports to Council; Hydro Ottawa Group June 2026 AGM release.
The direction of travel is up, not down — and that's the point of this piece. It's not a rounding error. It's a growing, dependable stream, and right now it has no destination written into policy beyond "general revenue."
02 — The gapWhere that stream disappears into
Hydro Ottawa's own language on this is consistent, year after year: the dividend "will be used by the City to fund municipal programs and services." That's it. That's the entire earmark. It is, by design, fungible — the same undifferentiated pool that funds the police budget, transit operations, road resurfacing, and debt service on every capital project council has ever approved, including the ones I've already documented running over budget or piling up as off-balance-sheet risk.
Meanwhile, the City's own Long Range Financial Plan work has already put a number on the problem this money could be solving. Council's June 2026 infrastructure and transit motion explicitly names a $1.23 billion funding gap for maintaining and renewing City infrastructure — a separate, narrower figure from the $10.6–10.8 billion ten-year infrastructure gap I've written about previously, but pointing at the same underlying problem: the basics (roads, facilities, water and sewer renewal) are underfunded, on the record, by the City's own staff.
One year's dividend, next to the gap it could be chipping away at
log scale — the bars are not proportional to pixel height below $100M; see labelled values
Sources: City of Ottawa, "Council approves City joining federal clean-fuel program" (June 2026 council motion coverage); Peter Karwacki, "Ottawa Doesn't Have $419 Million Lying Around..." liabilities series (10-year gap).
Let's be honest about scale: even fully earmarked, $22 million doesn't close a billion-dollar gap. That's not the argument. The argument is that a growing, guaranteed, publicly-owned revenue stream is currently doing the least accountable thing money can do at City Hall — disappearing into "general revenue" — when it could be doing the most accountable thing: showing up, every year, as a named line against a named backlog.
03 — The exception that proves the ruleCouncil already knows how to do this — for climate, not for infrastructure broadly
Here's what makes the current setup frustrating rather than just imperfect: council has already built the mechanism once. In the same June 2026 motion that named the $1.23 billion gap, council directed staff to create a new reserve fund for climate-related infrastructure capital projects, funded in part by "a portion of revenues from the annual Hydro Ottawa dividend."
What this proves
Council does not need new legal authority, a provincial ask, or a charter change to earmark dividend revenue. It already voted to do exactly that — for one category of spending. The precedent exists. It's just scoped narrowly to climate projects, and it's "a portion of," not all of, the dividend.
That's a good start on a program that should be the default, not a one-off carve-out attached to a single climate motion. If a portion of the dividend can be walled off for climate infrastructure by council motion, the rest of it can be walled off for core infrastructure renewal — roads, water and sewer mains, facilities — the same way, by the same mechanism, this term.
04 — Why "not LRT" has to be explicitThe P3/LRT liability is exactly the kind of hole this money would otherwise fall into
This is the part that needs to be written into the policy in plain language, not left to budget-season discretion. I've already documented that the City's off-balance-sheet P3/LRT liability line was the fastest-growing item in the consolidated financial statements — up $135.8 million in a single year, the smallest line item but the fastest mover. I've documented the East Extension's repeated timeline slippage. I've documented the St-Laurent tunnel's still-unrepaired structural risk. None of that is a reason to send utility dividend revenue chasing after it.
General revenue is fungible by definition. Without an explicit exclusion, a dollar of Hydro dividend that nominally goes toward "infrastructure" can simply free up a dollar of tax levy that then flows to LRT debt service, transit operating shortfalls, or Lansdowne 2.0's $16.4–17.4 million a year in debt servicing — and nobody outside the budget office would ever be able to tell the difference. An earmark that doesn't name what it excludes isn't really an earmark.
What "earmarked, not LRT" should mean in the policy text
A dedicated Infrastructure Renewal Reserve, funded by the full annual Hydro Ottawa dividend, with an explicit clause excluding its use for P3/LRT debt service, Lansdowne 2.0 debt service, or any transit capital cost overrun — reported publicly, dollar-for-dollar, against the $1.23 billion gap each budget cycle.
05 — The askFour things council can do without asking anyone's permission
- Convert the dividend policy from a revenue target into a renewal fund. Amend the shareholder declaration so the full annual dividend flows to a named Infrastructure Renewal Reserve, not general revenue, by default.
- Write the LRT exclusion into the policy text. Explicitly bar the reserve from being drawn on for P3/LRT debt service, Lansdowne 2.0 debt service, or transit capital overruns — the same discipline already applied, informally, to the climate carve-out.
- Extend the June 2026 precedent citywide. The climate infrastructure reserve fund already proves council can do this. Use the identical mechanism for the core renewal backlog instead of inventing a new process.
- Report it against the $1.23 billion gap, every budget cycle. One page, public, showing what the reserve took in, what it spent, and how much of the stated gap it closed that year — the same transparency standard I've asked for on the liabilities file generally.
None of this requires the OEB, the province, or a new tax. It requires council deciding that a City-owned company's profits should be visibly rebuilding the City that owns it — not quietly patching whatever budget line is short that December.
-
City to get guaranteed $20M a year from Hydro Ottawa after policy change approved
-
Why does Hydro Ottawa pay the City of Ottawa a dividend?
-
Hydro Ottawa presents 2022 Annual Report to City Council
-
Hydro Ottawa presents 2023 Annual Report to City Council
-
Past progress, future powered: Hydro Ottawa highlights record 2025 investments and launches 2026-2030 Strategic Direction
-
Powering the Capital: Hydro Ottawa Group Reports on Big Investments and Bigger Demand
-
Council approves City joining federal clean-fuel program
-
Ottawa approves $1.2-billion infrastructure funding plan, transit investments and housing measures
Thanks to Cole Fraser
ReplyDelete..candidate for council in Nepean