Hydro One Continues to Slide as the Company Faces a Lot of Uncertainty Under the New Government

Hydro One Ltd (TSX:H) continues to drop in price as Ontario Premier Doug Ford has come through on his promise to get rid of the CEO, Mayo Schmidt, as well as the board of directors. Last week he was able to fulfill his promise as Schmidt announced he was retiring and the board had also resigned.

Rising utility prices in Ontario enraged many consumers and one of the election promises Doug Ford made was to bring prices down and get rid of the company’s leadership. Without majority ownership, many scoffed at his claims and it’s surprising that he was able to accomplish his objectives so quickly.

The concern from investors is that the Ontario government is using the power it has to attain its political objectives. If the next goal is to bring down prices, then that will certainly have a detrimental impact on the company’s financials.

There’s also the concern of what this might mean for Hydro One’s acquisition of Avista Corp (NYSE:AVA), which is still not complete. The deal gave Hydro One a presence in the U.S. and would allow the company to achieve growth beyond just Ontario. From an investor’s point of view, it creates a lot of growth opportunities, but consumers in Ontario are concerned that they will become second-class citizens and that the priority for the utility provider would be on the U.S. market rather than on the domestic one.

This has created a lot of uncertainty for Hydro One and as a result the stock has dropped by more than 4% last week and in 2018 the share price is down a total of 14%.