ONTARIO HYDRO
For those not familiar with Ontario Hydro, it is one of the biggest electric power utilities in the world. Ontario Hydro is owned by the Government of Ontario, and effectively has a monopoly of generation and distribution of electricity in the Province of Ontario (about ten million people, and a lot of industry). Ontario Hydro operates twenty of the unique Canadian CANDU reactors, which have had both very good performance … and (more recently) bad. Ontario Hydro used to get about two thirds of its power from nuclear, which is a high ratio.
Ontario Hydro has been in the news a lot in the last decades, mostly being criticized by its many detractors. Criticism reached a peak as Maurice Strong was being recruited as Chairman in the early 1990’s. Much of this criticism was valid: electricity prices were rising; construction costs were spiraling; Management wanted to continue overbuilding nuclear reactors; the Corporation was not exactly user-friendly. Ontario Hydro is also well-known for its powerful and intangible Old Boys’ Club, and its impenetrable bureaucracy.
Maurice Strong changed the Corporation’s direction radically: new reactor plans were canned; one third of the labour force was cut; Management was (nominally) made more responsible; emphasis shifted from nuclear to sustainable development; electricity prices were frozen.
At the time of writing, the Corporation is in much better financial shape: debt is declining; profits rising (except for abnormal items); prices frozen. However, the large nuclear program is still limping (for reasons related to, but outside, this case). Nuclear had dropped to 47% of the Province’s electricity supply, down for 60% a few years earlier. Hydro had hired a group of seven Americans to run the Nuclear Division, which seems to be showing some fruit.
On April 1, 1999 (what an appropriate date to choose), Chairman Bill Farlinger announced the division of the old Ontario Hydro into five new companies. I wasn’t in the least impressed: the guts of Ontario Hydro is the generation capacity, mainly nuclear. The Transmission and Distribution and the other portions can be easily split off. However, the new Ontario Power (or whatever it’s called), still has 90% of the generation capacity in the Province, and there are few connections to Quebec, Manitoba, Michigan etc. so nobody can really sell in. It’s just a natural monopoly, like we discussed in business class.
No real changes to the company, no changes in people or the bureaucracy, probably little competition; this restructuring is a con job.
Ontario Hydro’s Stalin-esque bureaucracy has remained in place, despite the "re-structuring" that has occurred in the last few years. ONTARIO HYDRO RESEARCH/TECHNOLOGIES, THE NDE UNIT, WHAT ONTARIO HYDRO NEEDS, THE POWER WORKERS UNION, THE "SOCIETY", MAURICE STRONG