Hydro One: are you kidding?
by Parker Gallant
If you check in with Hydro One to see how those “smart” meters work when coupled with the outsourced Inergi billing and customer service system, you’re in for a shock!
The Hydro One outsourced service is apparently not working out too well, and the constant rumours and stories about smart meter replacement seems to be an indication that the devices are not as smart as they were supposed to be! Put the two together, allow people to voice their complaints to Andre Marin, Ontario’s Ombudsman and the result is thousands of complaints. Many of them are truly bizarre.
Here is a snip from the outsourcing agreement from the 2002 year-end MDA (Management Discussion & Analysis) of Hydro One:
“On March 1, 2002, we commenced an outsourcing services agreement with Inergi LP (Inergi), an affiliate of Cap Gemini Ernst & Young Canada Inc. Under this agreement, Inergi provides, among other things, customer service operations, supply management, pay operations, information technology, and finance and accounting services over a ten-year term. As part of this outsourcing arrangement, approximately 900 of our employees were transferred to Inergi. The initial fee payable to Inergi will be approximately $130 million in the first full year of the contract declining to approximately $90 million in the tenth year of the agreement, net of inflation adjustments and subject to decreases based on external benchmarking analysis every three years. Because this outsourcing arrangement provides for a defined competitive and continuously improved price for the outsourced services, we believe that it will allow us to continue to reduce our cost base and improve our competitive position. As part of this agreement, we are still responsible for the capital expenditures associated with these services.”
Surely a recap of Hydro One’s new billing system is also appropriate; this note can be found in the 2013 2nd Quarter MDA of Hydro One under the heading Future Capital Expenditures:
“Other capital expenditures are expected to be approximately $200 million in each of 2013, 2014 and 2015. These expenditures include investments to replace our end-of-life customer billing system with a new CIS and smaller projects related to the continued realization of increased productivity from our enterprise-wide information system.”
I have already highlighted the problems with Hydro One’s new CIS (Customer Information Service?) in several articles including one just before the launch of the Ombudsman’s investigation. (Find it here!)
Other articles focused on those smart meters including one I wrote (found here) indicating that the smart meters were actually being replaced way back in 2010 shortly after they were installed at a cost of $700.54 each.
Hydro One recently released their 2014 2nd Quarter results and a August 14, 2014 article in the Toronto Star had this quote from the Director, Corporate Communications, Daffyd Roderick: “ ‘Many Hydro One customers have electric heat,’ said spokesman Daffyd Roderick, ‘and had trouble keeping up with bills that were 20 to 30 per cent higher than normal. That boosted the number of accounts in arrears, and the amount they owe.’ ”
Had Mr. Roderick checked his own press release he would have quickly noted it stated Hydro One’s cost of power was 18% higher as were Hydro One’s Operating costs when the first two quarters are compared to the prior year. The fact is, increased consumption because of the cold winter played only a minor role in causing the accounts to be in arrears.
We can all hope that Andre Marin’s report will tell the truth, rather than the spin put out by Hydro One.
August 25, 2014
Stay tuned for the next installment on Hydro One as more interesting facts are disclosed and we will have a look at how well that 2002 outsourcing agreement has reflected itself in the reduction of their “cost base.”
The views expressed here are those of the author.
Parker Gallant will be speaking in Exeter and Grand Bend on August 26th