Ontario Electricity Regulation Crisis Report Part 95: Ford Brothers Enabling Toronto Hydro’s Gravy Train

In the weekend’s Toronto newspapers, commentators Daniel Dale at the Toronto Star, Terence Corcoran and Chris Selley at the National Post examine the economic record of Toronto’s Ford brothers. None of these assessments address the Ford brothers’ direct contribution to the governance crisis at city-owned Toronto Hydro and their record of ignoring harm to the city’s electricity ratepayers. The citizens of Toronto have much more at stake with our power delivery service than with garbage collection or vehicle licensing.

Toronto city council is failing to supervise Toronto Hydro while the municipality’s largest business asset jacks up rates unjustifiably and squanders what may amount to dozens of millions of dollars per year.

The complexity of Toronto Hydro’s scheming is clearly over the head of the Fords but the brothers bear much of the responsibility for the harm.

With the Ford’s enablement, Toronto Hydro’s gravy train is picking up speed. Since the Fords gained power in 2010, compensation for Anthony Haines, Toronto Hydro’s CEO, has jumped 32%. Haines is on pace to haul in more than $1 million this year before considering any special pension bonuses or retirement allowances.

Including his $330K special retirement allowance gain last year, Haines took home 6.8 times the average pay of other municipal workers in equivalent positions of responsibility at the five largest municipal water utilities in Ontario — positions at least as challenging as running a power distributor.

This May, I began documenting serial perjury by Haines, who has relied on lies under oath and falsified credentials to advance his career for over 20 years. (See parts 68, 86 and 89.)

Before Haines’ phoney CVs were known, I had already presented evidence in this series showing how Toronto Hydro has higher rates than any other urban utility in Ontario, its reliability is poor relative to comparable utilities and worsening, and outages are treated as assets in Toronto Hydro’s effort to justify rate hikes.

For years, Haines has been telling everyone who will listen that Toronto Hydro is increasing rates as fast as possible. Utility types are mesmerised by him. He is chairman of the Canadian Electrical Association. He has major addresses scheduled before the Ontario Energy Network and the Canadian Association of Member of Public Utility Tribunals. Toronto Hydro’s Board of Directors keeps giving him bonuses based on how much he can jack up rates.

Spinning half-truths and buzz words like “Smart Grid” and “conservation culture”, Haines specializes in massively ramped up capital spending. In its 10 year capital plan of 2007, Toronto Hydro told the Ontario Energy Board it would be spending about $130 million this year. The utility’s capital budget for this year is a grotesquely bloated $579 million. Armed with convenient claims of a newly discovered “infrastructure deficit”, the utility sounds the “smart grid” alarm relentlessly.

Rather than defending consumers as a regulator should, the Ontario Energy Board under McGuinty became so afflicted with conflicts of interest that the regulator is now part of the problem. As one example of conflicted interests, one of the regulator’s full time board members recently move directly over from the Board to become the VP for Regulatory Affairs at Toronto Hydro.

The City of Toronto’s finances could be hammered if the Ontario government restores the kind of solid leadership that once distinguished the Ontario Energy Board. Faced with a real regulator, Toronto Hydro’s annual dividend to the City — $48 million last year — would be in severe jeopardy. Regulatory disallowances could easily run into dozens of millions of dollars related to Toronto Hydro’s out-of-control capital program.

How can Toronto Hydro’s governance rot and uncontrolled spending continue?

From their voting records, Councillor Doug Ford and now deputy mayor Norm Kelly have demonstrated that they are the leading members of council today ensuring that Anthony Haines, and his enabler, Toronto Hydro chairman David Williams, still occupy the big chairs at Toronto Hydro. (Rob Ford has not voted on Toronto Hydro governance issues recently.)

In advance of the July meeting of council, I delivered to every member of council a dossier documenting Haines lying about his credentials in sworn testimony. I had an opportunity to discuss this material directly with Councillor Doug Ford on July 17th at the City Council meeting, before the agenda item addressing Haines and his phoney CVs was debated. Doug Ford’s reaction to my evidence was to say that “Anthony is a good guy”.

Toronto Hydro’s governance crisis was again on Council’s agenda for the October meeting. Again, I circulated a dossier on Haines to all councillors documenting new evidence of perjury. Haines directly lobbied key councillors in advance of that meeting. When the meeting convened, the Scarborough subway dominated the debate and the Haines agenda item mysteriously disappeared. Anyone with details on what happened is most welcome to post notes here or to contact me privately.

Haines’s perjury is black and white for anyone with a clear understanding of right and wrong. By contrast, the complexity of the utility’s malicious financial, operational, and regulatory wrongdoing require more focus to understand.

The Toronto Hydro vs. Ontario Energy Board mash-up illustrates the risks to the pubic interest of government ownership and politicized regulation. The contrast between the high performance, privately owned gas distribution system serving Torontians vs. the dysfunctional government-owned system could scarcely be more stark.

Although a complete restructuring of Toronto Hydro is needed, the urgency of the immediate crisis at Toronto Hydro calls for a stitch in time. City Council cannot wait around while the Ford brothers work up their problems.

As I have noted previously in this series, the utility cannot conduct orderly business while Haines and Williams occupy the key positions of responsibility.

All of utility’s current business is tainted.

Toronto’s city councillors, as representatives of the owners of Toronto Hydro, must act now to clean up the utility by putting in place a management team committed to ethical standards of business.

The leading advocate on council for positive change at Toronto Hydro is Gloria Lindsay Luby (Ward 4). I encourage citizens of Toronto concerned about our electricity future to support Councillor Lindsay Luby.

With a key labour agreement coming up for renewal early in the new year, a legitimate board chair and CEO are urgently required at Toronto Hydro.

At the Wednesday November 13th general meeting of council, our city government must get cracking to clean up the governance crisis at Toronto Hydro.

Take out the garbage. Fire Haines and Williams.


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    • There is a twisted story behind this dividend that goes back to what I consider the most foolish set of decisions ever taken by the Ontario Energy Board. The decisions were taken under then OEB chairman Floyd Laughren in 2001 and 2002. When Mike Harris converted the former municipal electricity distribution co-ops into corporations, the co-ops (like Toronto Hydro) had accumulated in the order of $7 billion in retained earnings. What the OEB foolishly allowed was owners of the new corporations to earn a return on money that ratepayers, not owners, had invested. Today, many municipal governments (such as Toronto city council) have a direct interest in squeezing as mush profit as possible from their distribution utilities because these profits off-set expenses that would otherwise have to be paid for through taxes. Our power bills contain hidden, back door taxation.

      • Hi Everyone,

        The only way and only person that could really clean out all the problems at Toronto Hydro, Is a person who can walk on water… and no one else…

        Look Toronto Hydro and its owner the City of Toronto will never look into or probe in what is and what isn’t taking place within Toronto Hydro, Its All System Go, and as long as the Money keeps coming in from the Toronto Area Rate Payers nothing will ever get done, except year after year the rates will just go out, and the foolish out of control spending will keep going like a Gravy Train from here and forever…

        The Only way to get a handle and control is that Toronto Hydro gets sold… not in parts the entire corporation and then things will be and sound and look better…

        And rest assure that their are not too many men who can walk on water this days who would take a task like that to Privatize Toronto Hydro, there has been lots of talk in the last 20 years but no one has every made the step forward in making that happen…

        If Toronto Hydro was sold, The City Of Toronto would be very big winners and so would the Rate Payers if its done correctly and have a Board, that always keeps a honest Microscope and Protection for the Rate Payers….

        Lets just say this, We All Know down in the City of Toronto no one would dare to get the ball Rolling and get Toronto Hydro Fully Sold…

        Toronto Hydro has and always will have Planning Problems, and Employee Problems to make any new gains and where Toronto Hydro needs to be in the next 3 to 5 years… with their current Management and Union and Direction as a Stable Company….

        I hope my comments today, gets seen by a person who can walk on water and bring some major change at Toronto Hydro, before the lights go out again and this current Management and Unionized Employees start the blame game this is too old this needs to be changed, there is too much new load from all the Condo’s that are going up and going like a Virus, and Blaaa, blaaa, blaaa, and we Need More of the Rate Payers and Tax Payers money, same song and dance, like year after years, and nothing will ever get done, and talk and talk, and band aid repairs on Toronto Hydro Circuits until another breaker blows up, or a half dozen lead cables burn apart due to under maintenance, and lack of planning and mismanagement…

        Toronto Hydro is a very weird Beast , and the only way to turn a place around like this current Toronto Hydro is to sell it right off, and let the correct and proper people who know how to run and operate a Power Distribution company like Toronto Hydro with the latest Hardware and Technology in the electrical field and do it right the 1st time capital new projects and sound 2nd party Engineering practises that is applied and used all around the world today in major Cities in the US and Europe, and Over Sea’s… <———————–This is what Toronto Hydro and other Transmission and Power Generation Companies have lacked for over 50 years in Canada…. Thomas, Keep up the Outstanding Job, I do come around time to time to read up in what is new in your findings 🙂 Santers

        • Toronto Hydro is going to install 8,800 solar panels on city owned buildings. These will have 20 yr. FIT contracts so this is also the business of all Ontarians as they will be paying for these as well.
          Toronto residents don’t care because someone else is going to pay for these solar panels.
          Just try to get rid of a piggy bank like Toronto Hydro.

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