Ontario’s Electricity Regulation Crisis Report ““ Part 15: Outstanding Column by Cohn in Star

Please allow me to recommend Martin Regg Cohn’s beautifully crafted, powerful essay in the Toronto Star: “Toronto Hydro’s brinkmanship the mark of a monopoly” 

Cohn’s piece continues the Star’s massive outperformance of its print competitors working on this story. John Spears at the Star has been key to that paper’s record. The Post’s Matt Gurney’s provide a summary of events up until Jan 11. Unfortunately, he got some key facts wrong — particularly the inaccurate claim that CUPE Local 1 was supporting the position of Toronto Hydro. Gurney confused CUPE Local 1 for another union, The Society. The Globe and Sun, by comparison, both allowed themselves to get played by the cynical schemers at Tony’s Hydro (formerly Toronto Hydro).

While Mr. Cohn’s column deserves high praise, I offer three edits.

First, the headline for the column, which Cohn may not have written, is not as sharp as the body.

Canada has many energy monopolies. The kind of behaviour we see at Tony’s Hydro (formerly Toronto Hydro) is only from government-owned utilities.

An interesting parallel to the recent behaviour of Tony’s Hydro (formerly Toronto Hydro) is the current behaviour of provincially owned Nalcor at the Muskrat Falls hearing before its regulator in Newfoundland and Labrador. The provincial government there has curtailed both the scope and the duration of the current hearings in such as way that, with a little ragging of the puck, Nalcor hopes to skate away from a thorough inquiry of its absurd proposal to risk billions of public dollars on a development the province will almost certainly regret.

Canada has relatively few private utilities. Prominent ones include Fortis, Emera, TransAlta, TCPL, and Enbridge. Perhaps someone more thoroughly knowledgeable about regulation can offer some good counter example, but I cannot think of an instance ever of any of them pulling a stunt like that now being pulled by Tony’s Hydro (formerly Toronto Hydro) except for one time.

In the late 19th century, Consumer Gas, much later to become part of Enbridge, threatened a gas blackout on the City of Toronto during a franchise dispute.  That pressure play was one of the reasons Ontario Hydro was created in 1906. After that, the private utilities came to realize deeply, in their bones, that they may only ride the magic carpet of almost 100% guaranteed profits if they make a credible effort at consumer service. One of the roles of the private boards of directors is to ensure that the egos of the CEOs do not threaten their utilities’ futures. It is not a coincidence that Canada’s private utilities are almost all excellent companies.

Neither Nalcor nor Tony’s Hydro (formerly Toronto Hydro) understand these basic management concepts.

The temper tantum now underway at Tony’s Hydro (formerly Toronto Hydro) will severely hurt both ratepayers and taxpayers in the City of Toronto. The temper tantrum is increasing the cost of borrowing, increasing the cost of future contracted services, will drive away smart young employment candidates, will delay solving the real power system reliability problems the City is at risk for, and is causing a heavy barrage of in coming law suits. All this is costing ratepayers and taxpayers in Toronto a very large but undetermined amount of money. It will be years before we can estimate the full cost of this temper tantrum, even if the Toronto Hydro board of directors has the competence and sense of responsibility to start restoring of the utility’s reputation tonight.

A second edit I would offer for Cohn’s fine column is that he fails to pinpoint how to start fixing the problem. The path back from Tony’s Hydro to Toronto Hydro won’t start until the Board fires the CEO Anthony Haines. After that, more firings may be necessary. If the board of directors does not get on with its job quickly, the city will have to step in and start cleaning up a wider mess. If all else fails, the Ontario Energy Board is equipped to seize the utility, but that would be almost too messy to contemplate.

There is disconcerting evidence that utility’s board is incapable of grasping its current duty. The utility, having been caught lying to the public, is reportedly seeking to negotiate with the Ontario Energy Board.  Chairman Clare Copeland has characterized the event as a “spat” between the utility and the regulator. Lying and threatening the public is not an interagency “spat”. As Cohn clearly articulates, this situation is a serious dereliction of the utility’s duty to serve consumers.

My third edit for Cohn’s outstanding work is to disagree with his characterization of Tom Mitchell at OPG as “boring”. Mitchell’s job is to make his job look boring. Cohn might look at Mitchell more closely.

One Comment

  1. Ironies abound.

    Certain folks, including Cohn, are unabashed cheerleaders for renewable energy, which will cause huge bill increases. These increases will in turn put pressure on the OEB to mitigate overall increases — by trying to limit other increases. Toronto Hydro is completely misplaying its hand but some asset renewal is required.

    Courtesy of the Green Energy Act, might we end up with the worst of both worlds — high prices and low reliability ?

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