Ontario Ombudsman declares Hydro One lied to regulators, stonewalled customers

Suggests sale of the utility, dismantling current oversight, more bad news for Ontarians

TORONTO—Following what has been billed as the largest investigation (following up on 10,700 complaints) ever conducted by his office, Andre Marin, the Ontario Ombudsman has released a report that lambasts the public utility for issuing faulty bills to more than 100,000 customers, then lying to the government and regulators in an effort to cover up the problem and then spending $88.3 million in public funds to fix the issue.

“Like a lot of huge, monopolistic organizations, Hydro One lost sight of its duty to the public,” the Ombudsman said during the release of his report on Monday at Queen’s Park. “It was so focussed on the technical side of its new system, it failed to consider the impact it was having on customers.”

The Liberal government has introduced an omnibus bill that will strip legislative officers’ oversight over the Crown corporation, but the concept has released a storm of protest from those, in turn, charged with oversight of the provincial government.

“The officers report to the (provincial) assembly, not to the government of the day, and provide independent, expert reports and analysis of government operations and service delivery,” wrote eight independent legislative officers, including the Auditor General and the Ombudsman in a joint letter opposing the sale of a majority position in Hydro One. “The officers believe that the government’s proposals…will reduce the scope of the reviews that can be conducted on behalf of the people of the province.”

The plan to strip the oversight of Mr. Marin and six other independent watchdogs is integral to the government’s plans to sell off 60 percent of Hydro One, the company that manages the province’s transmission lines, to private interests, with no single owner able to acquire more than 10 percent of the stock.

Mr. Marin has urged Premier Kathleen Wynne to reconsider that move, alleging that many of Hydro One’s problems were only solved because of his investigation. The Ombudsman also pointed to the example of ORNGE (Ontario’s air ambulance provider that was the centre of a slew of financial scandals) as what can happen when public oversight is lost.

The Ombudsman suggested that privatizing Hydro One and believing that will solve its problems is tantamount to living in a fool’s paradise.

Premier Wynne countered, however, saying “I am confident that the company will be better run because that, again, is another part of this process. It is going to be a different entity. It’s going to have different controls on it.”

The province is planning a separate oversight agency to monitor the new hybrid organization, but that corporate ombudsman will report to the corporation’s board, rather than to the legislature. Mr. Marin derided that style of oversight as “omsbuddies” and suggested they would be too close to the corporation to raise any serious issues.

As it was, Hydro One reported only 22,000 complaints to its regulator, according to Mr. Marin’s report, even though the correct number likely numbered nearly five times that figure. Many of those complaints, some involving several thousand dollars and running unresolved for a year before finally being resolved by the Ombudsman’s office.

In response to those ongoing software issues, which Mr. Marin declared were themselves the result of the corporation’s culture of hubris over its technology superiority, Hydro One attempted to obstruficate its way through.

“They obstructed and lied to the Minister of Energy’s office when they asked questions, the board of directors and the Ontario Energy Board,” Mr. Marin claimed, noting that he received several different answers as he tried to discover the depth of the problem. “Trying to deal with Hydro One math is like trying to pin down a kangaroo on a trampoline.”

Hydro One CEO Carm Marcello pushed back, however, and denied lying to Mr. Chiarelli’s staff. Mr. Marcello claimed that the number of customers affected by the billing problems fluctuated constantly and that was the reason for the varying answers.

Although denying any prevarication, Mr. Marcello did admit that the billing issue “got away from us” and that the company had let its customers down, adding “I’m sorry we put our customers through that negative experience and they felt that they had no recourse but to go to the Ombudsman.”

The opposition party leaders were quick to support Mr. Marin’s position.

“The culture at Hydro One needs to change. Selling any portion of it won’t necessarily accomplish this,” said Progressive Conservative Leader Patrick Brown, adding that he did not think the issues at Hydro One would have seen the light of day if it wasn’t for the Ombudsman.

“Having the legislative authority to go into that corporation, that public corporation, that Crown corporation, and do the digging and do the research and compel documents and compel witnesses so that they can get to the bottom of what the problem is an extremely important tool and it’s a tool of the people of Ontario and that tool will be lost when this gets sold off,” said NDP leader Andrea Horwath.