Hydro One’s billing mess: getting worse

How much will it cost us to fix Hydro One's billing mess?
How much will it cost us to fix Hydro One’s billing mess?

When I was contacted for help recently by a Hydro One customer concerned their billing was wrong, I went in a search for a “multiplier”.  The bill, sent after 10 months of no bills, was for almost $20K.  A “40 times multiplier” statement also appeared on the bill.

As it turns out, Hydro One has a simple “multiplier” explanation:  “If your meter has four main dials, it records thousands of kilowatt hours. You’ll see the    words ‘MULT X 10’ on the face of your meter — that means when you calculate your usage, you multiply the reading by 10.”

The meter in question is a four-digit meter (Trilliant smart meter) but there is no 10 times on it, just as there is no reference to a 40 X multiplier on Hydro One’s website!

Another person contacted me to tell me she is forced to sell her three-unit apartment building because the Hydro One bill alone (excluding natural gas, taxes and insurance) almost exceeds the monthly rental income. She can’t raise the rents because the Landlord and Tenant Board restricts rent increases to 1.6% for 2015.  (The building uses natural gas for heat and  hot water.)

I suspect these two examples are typical of what the Ontario Ombudsman is hearing in the office’s billing investigation; the report is not due for release until later this  year.

Both of the people who approached me were serviced by Hydro One’s distribution arm, so I took a look at the 2014 Annual Report and their MD&A; there is interesting information there related to the billing mess that has already received bad reviews from Ontario’s Ombudsman, Auditor General and the general public.

The press release for the annual report issued February 12, 2015 stated:

“Our 2014 net income decreased by $54 million or 7% compared to 2013. This was primarily  due to the increase in our distribution operation, maintenance and administration costs, as a    result of a number of factors, including our customer service recovery initiatives and the    increase in our bad debt expense1, resulting from the temporary suspension of collection     activities during several months in 2014”.

The annual report admitted this admission in respect to their Customer Information System (CIS):

            Customer Service Recovery Cost – As a result of billing issues that arose from the implementation of our new CIS in 2013, the    effects of which became acute in early 2014, our company established the customer service   recovery project to dedicate staff to resolve outstanding and any new billing issues and stabilize the billing system. We anticipated, and fixed as a target, costs of $48 million (including revenue impacts) for this project. The project was completed in 2014 and the CIS is now in sustainment mode. As the costs of the customer service recovery project exceeded the target,  our company did not meet this anticipated target.”

Traveling back to a June 15, 2012 filing with the Ontario Energy Board (OEB) to see what may have preceded this debacle on their billing system we find this interesting response from  Hydro One’s spokesperson Mike Winters2, SVP. Engineering & Technology to a question posed by an intervenor: “HCL AXON was selected as system integrator and during the discovery phase Hydro One   negotiated software costs for Itron and SAP. Hydro One used Gartner for third party expertise to discern the level of discount that could be expected from SAP. Hydro One was pleased to       report that they were able to achieve an approximate 85% discount from SAP.”

Earlier in this filing with the OEB Mr. Winters disclosed the project name was Cornerstone, it involved four phases, and the CIS was the final phase. He said: “Phase 4 involves a CIS to replace the customized, legacy CSS built on discontinued platforms, to simplify interactions for customers and to drive efficiency and effectiveness through innovation and service delivery transformation.”

It is questionable whether the new customer billing system has simplified any issues or interactions for Hydro One’s customers; instead it has caused nothing but frustration, and raised the issue of “energy poverty” for many more people suddenly faced with electricity bills out of proportion to their actual consumption.  The Ombudsman’s office has received almost 10,000 complaints—about 1% of all of Hydro One’s customers.  I would bet Hydro One quietly admitted their mistakes in thousands of cases, and rectified the problems before they reached the Ombudsman’s office.

Despite the promises, execution of this billing system change was a complete disaster and the SVP, Mike Winters, touted by Hydro One as a winner of the “KITE3 award in late 2012, was moved to the position of SVP, Engineering, at Hydro One—he is now with Rogers Communications.

A couple of other laughable quotes from the 2012 Annual Report and MD&A related to the CIS include these two bon mots:

            “Since this system directly impacts our end customers, stringent test exit criteria must be met        prior to placing it into production.”

“With the design phase complete, the CIS Project is currently in the system integration phase.       Internal controls have been documented and will be tested for adequacy and effectiveness with     any remediation effort to be completed prior to the go-live date in 2013.”

As we all know, the “go-live date” occurred in 2013 and Hydro One customers have felt its effects for almost two years.  It apparently wasn’t enough for ratepayers to be hit with rising electricity costs so the biggest LDC in the province, Hydro One, also decided to stick us with a messed up billing system.  No doubt the OEB will grant Hydro One an approval to increase their rates for the cost overruns of the CIS meaning ratepayers will be paying even higher delivery rates in the not too distant future.

(C) Parker Gallant, March 4, 2015

1. Bad debts increased $30 million from 2013 representing an 83% increase in one year.

2. Salary disclosed on the 2013 Sunshine list was $422,067

3. “Winters was selected for Hydro One’s leadership in solving business problems by leveraging technology and business process improvements in today’s challenging North American utility environment.”

The views expressed are those of the author and do not necessarily represent Wind Concerns Ontario policy.

Comments

John Vincent
Reply

Don’t forget, this whole “smart meter” debacle was fostered on Hydro One by the government at the break up of Ontario Hydro. The Market Design Committee (of which I was a participant) of the late 90’s stipulated the use of a meter to give hours of use billing. The technology hadn’t been developed at that time. Since the MDC charged the new Hydro One with passing on the bills of all electricty producers in Ontario, plus their own transmission charges. They had to have technology developed to account for hours of use electrcity. The technology hasn’t been good, as we know. However, it’s government mandate that it be there, not Hydro One’s.
MDC viewed hours of use metering as a means to promote electricity conservation. I doubt that has been the case.
Since Wynne is foaming to sell Hydro One, it won’t make anything better for the public, because its her government who is mandating the position Hydro One is in right now. The whole degeneration of electricty production in Ontario, going back to and including, Ontario Hydro, has been purely due to government of the day interference in day to day operations of the electricty producers and managers in this province.

Barbara
Reply

John,
U.S. SEC Form 40-F, EX-99.2, Algonquin Power & Utilities, Filed 2014-03-28

‘Business acquisitions and development projects’
Jan.4, 2012, 10 MW ac solar project near Cornwall, OPA contract, 20yrs.,term rate $443/MWh

http://www.sec.gov, Search Edgar, enter Algonquin and then select Algonquin Power & Utilities > follow the links to the above Form

It would be much easier if there were direct links to SEC filings.

Joe
Reply

I don’t see any Liberal foaming to sell Hydro One. Ontario Hydro was broken up, by the Conservatives, to ready it for sale. It did not happen, thank god. I believe the old Ontario Hydro should be reconstituted. This depends on the cost of doing so.

Barbara
Reply

For example, private electric companies provided cheap and reliable electricity in the U.S. for many years.

The old Hydro was broken up so that private parties could sell their electricity to the government.

The issue now is that U.S. private companies and Hydro in Ontario are being forced to take and use very expensive and unreliable renewable energy by government mandates.

It would not have mattered if the old Hydro went private as the government can and did force both private and public electric utilities in both countries to use renewable energy.

Government actions forcing 25%, 40%, 50% of electricity to come from renewables on to power producers. Government policy is driving this with support from those who can cash in on this situation.

John Vincent
Reply

Believe Wynne is getting ready to sell Hydro One. She’s doing it under cover from the media. You’ll hear about it when it happens.
The old Ontario Hydro is effectively and reallistically gone. IESO, the old Ontario Hydro System Control Center, has merge with Ontario POwer Authority. This a group comprised of Ontario electricty producers, primarily Green Energy producers. They now have the means to control who puts out what., The Ontario Hydro generation branch is now Ontario Power Genration. A completely seperate company from Hydro One, and the former IESO. Hydro One is the transmission branch of the old Ontario Hydro and the is your electricty delivery system. They are also charged with passing along all bills associated with electricty production whether its due to them or not. They don’t set rates.
I agree, the return of Ontario Hydro would benefit consumers..IF…..the government kept their hands out its business. That won’t likely happen.

Barbara
Reply

And the public doesn’t understand that it makes no difference if a power company is private or public as long as any government can force/mandate the use of renewable energy.

Canadian tax policies are being used to encourage and support the production and use of renewable energy. Some call this passive government support.

Joe
Reply

It does make a difference who owns the electrical system. It is too important to be sold into private hands.

Barbara
Reply

The issue of being forced to use renewable energy applies to both public and private companies as this is done by government action.

And it is important who owns and controls private electricity producers and the same is true for public companies when it comes to control.

penny
Reply

i have two meters same kind i am on tou one meter multiplies at 40 the other at 80 when i questioned why they told me that it depended on my type of transformer. I am still not satisfied with the answer and I am still waiting for an explanation as a consumer I should be able to understand.

Barbara
Reply

Penny, how long have you been waiting?

Barbara
Reply

Google:
“Trilliant Holdings Inc.and Subsidiaries-Notice and Acces…”
P.14

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