Our electricity mess
By Jim Poling
Published Aug. 16, 2018
The Hydro One leadership mess remains just that – a mess.
The power supplier to 1.3-plus million Ontarians, most rural and suburban, still doesn’t have a board of directors or a chief executive officer (CEO). The 14-person board resigned en masse when the new Ontario government forced CEO Myron Schmidt to retire in July.
The expectation was to have a new board and a new CEO sometime this month but it doesn’t appear that will happen soon.
Hydro One has been a mess for some time thanks to the bone-headed policies of a succession of Ontario governments, both Liberal and Conservative.
Doug Ford, the new Conservative government premier, made the latest contribution to the mess after railing about the company’s rich executive compensation. He kept a promise to get rid of Schmidt, forcing him to retire with a $400,000 lump sum payment and without losing about $9 million in equity compensation.
Schmidt had been earning $6.2 million a year as the Hydro One chief, which Ford found outrageous. Schmidt’s salary increased $1.7 million last year.
Adding to the outrage was the Hydro One board, which decided its members should receive a $25,000-a-year raise. Their pay soared to $185,000 from $160,000, for part-time work.
Ford presumably will demand salaries for a new CEO and new directors be less. Critics say that paying less will result in getting second-rate people who will drive Hydro One down to a second-rate utility.
I beg to differ. You don’t need a $6 million CEO, or board members paid $185,000, to run Hydro One effectively. There are experienced and skilled people who can do the job just as well for less.
This pay-big-to-get-the-best attitude spun out of the new global plutocracy that began rising three decades or so ago. The super rich began to take control of politics, business, sport and entertainment, creating stars and paying them obscene compensation for their fame and financial performance.
During the 1990s we saw CEOs and other senior executives retire or otherwise leave their positions and be replaced by people paid two and three times the salaries received by their predecessors.
CEO earnings increased 937 per cent between 1978 and 2016, the Economic Policy Institute, a non-profit American think tank, has reported. During the same time the compensation of American workers increased 11.2 per cent.
It was the growth of the plutocracy and its elitist attitudes that landed Myron Schmidt in Canada as Hydro One CEO back in 2015.
Schmidt was no corporate genius who appeared as a dream come true. He was born and raised in Kansas, a football player with an average education (business degree from Kansas State).
He held various positions with General Foods then joined ConAgra Inc. and ran its Canadian operations. In 2000 he joined Saskatchewan Wheat Pool helping to transform it into Viterra Inc., Canada’s largest grain handler and a major agri-business.
News reports say he did a good job growing that business and doing good for investors.
At Hydro One, before being pushed out, he said the latest quarterly earnings were up 33 per cent and the utility had added 400 jobs while delivering $114 million in savings, all of which he called “remarkable statistics for a company that’s in transition.”
That’s all nice but I’d like to know what the $6.2-million CEO and Hydro One did for me, a mere customer.
The utility’s internet outage alert system, which should be a huge benefit to folks who are away from their cottages or homes for extended periods, does not work the way it should work. Its brushing and tree removal program along power lines is a disaster, which has led to unreliable electricity delivery.
Hydro One says its line brushing cycle used to take nine years to complete but has been reduced to three years. Really? The Hydro One line behind my lake place has been brushed once in the last 32 years.
Hydro One can do much better, but it doesn’t need a multi-million dollar CEO and overpaid board to do the job. It needs to do better for its customers, not just its executives and shareholders.
The Hydro One ranks are comprised of dedicated, hard-working folks not being paid millions. Their leaders should be much the same.