Last Fall, Toronto Hydro presented a rate proposal to the Ontario Energy Board that would have jacked up household rates for Toronto Hydro’s portion of bills by about 40% and used an unapproved rate making methodology. The regulator carefully reviewed the proposal, including calling witnesses from the utility. The decision, issued January 5, 2012, is carefully reasoned and declined the rate proposal. Instead, the decision directed Toronto Hydro to develop a new rate plan using the incentive regulation methodology used by the rest of the sector.

The utility’s actions immediately leading up to, and immediately following, the release the Ontario Energy Board’s decision reveal that the utility was planning a confrontation. One key fact to observe is that the utility was attempting to apply pressure on the regulator through the press in advance of the release of the decision. Early developments are discussed in greater detail in Part #1 of this series.

Since the decision of the regulator was handed down, senior management, with the support of the Toronto Hydro Board of Directors, have been behaving in a fashion that has already profoundly damaged the utility and the City’s interest in the utility. On January 5th, the utility issued a press release saying the decision “will impact…customer…safety”. This is an outrageous threatening statement against the citizens of Toronto and our guests. Having reviewed the Ontario Energy Board’s decision in detail, it is my opinion that Toronto Hydro’s threat to public safety is unsupported by any element of that decision.

The utility has followed up with mass firings of contractors, a move that is likely to incur substantial financial damage claims and drastically impair the utility’s capacity to undertake needed infrastructure work. Given the scale work required in the near future, the utility will be soon trying to rehire the same contractors it recently treated unfairly.

Developments up to January 31 are summarized in Part #28 of this series.

Now the utility is pursuing deep, unplanned cuts to the utility’s own technical staff. These cuts should be understood in the context of the volumes of evidence presented by the utility itself to the Ontario Energy Board about coming labour shortages. This evidence has focused mainly on a large soon-to-arrive wave of retirements and the urgent need for work force renewal. In response to this evidence, the Ontario Energy Board has approved generous funding increases in recent years to achieve this work force renewal. While I believe Toronto Hydro would benefit from careful, stepwise progress towards enhanced utility efficiency, the utility has presented no plans that support its current radical downsizing.

The actions senior management are now undertaking, with the support of the Board of Directors, will cost the city’s taxpayers and ratepayers literally tens of millions of dollars. We must expect that these actions will result in higher borrowing costs, substantial legal settlement costs, and more costly contracting in future on top of tens of millions of dollars of imprudently incurred severance costs.

The utility’s actions are directly imperiling the City’s preparations for the Pan Am Games in 2015 and many other key infrastructure initiatives.

I have published a detailed series of reports and analysis on these ongoing developments focused on severance issues in Part #37 of this series.

My conclusion is that the management of the utility is behaving in a reckless and irresponsible fashion.

Toronto City Council is the shareholder’s representative yet Council has failed utterly to supervise the City’s investment in Toronto Hydro. If you live or do business in Toronto, I urge you to speak to your local member of Council. The Councillors who sit on the Toronto Hydro Board and therefore bear more responsibility, are Shelley Carroll, Ward 33 (Don Valley East), Josh Colle, Ward 15 (Eglinton-Lawrence), and Ron Moeser, Ward 44 (Scarborough East).

The first order of business should be to stop the unplanned downsizing immediately. The second priority should be to replace the rogue CEO, Anthony Haines, Canada’s highest paid municipal employee.

I have no interest in any matters related to Toronto Hydro other than as a customer and a taxpayer.

Post Script: Here is a short note from the Toronto Star reporting on the rally. I have posted several photos of the event on the Tom Adams Energy Facebook page. Parker Gallant and I joked with John Camilleri, President of CUPE Local 1, thanking him for organizing our second demo at Tony’s Hydro. Photos from the first demo Parker and I organized are here. Unfortunately, I missed the photo of me standing with Mr. Camilleri.