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Editorial: Interesting questions for N.L. Hydro

Hydro Place in St. John’s, headquarters of Nalcor Energy and subsidiary Newfoundland and Labrador Hydro.
Hydro Place in St. John’s, headquarters of Nalcor Energy and subsidiary Newfoundland and Labrador Hydro.

There could be some interesting times ahead for Newfoundland and Labrador Hydro.

That is, at least, if Hydro’s current general rate increase application is any guide — because, as part of the process, the province’s Public Utilities Board is asking some interesting questions.

Upcoming general rate increase hearings will look at rate hikes suggested for 2018 and 2019, including a Newfoundland Hydro proposal to use power from low-cost sources, but bill customers as if the power was being generated at the more-expensive Holyrood Generating Station. The power company wants to use that over-billing to build up a fund to soften the rate impact when the Muskrat Falls project comes online and power rates jump significantly.

Among the questions from the board?

Well, just what kind of performance bonuses were paid to Hydro management employees with performance incentives in their contracts, and what kind of standards were used to set the bonuses.

In case you’re wondering, there are 35 senior Hydro positions that could potentially earn performance bonuses. If all of the employees received the maximum benefit in 2016 — the last full year for which figures were available — the utility would pay out a total of $695,868 in bonus cash. In that year, the utility paid out $651,497 in bonuses.

Another question? The board wants to know what Newfoundland and Labrador Hydro is doing to cut expenses.

In its answers, Hydro promised an “aggressive approach” to cost cutting — “minimizing overall staffing requirements,” “the development and implementation of an attendance support program to reduce sick leave and associated costs, such as overtime,” and “a review of overtime and identification of actions to reduce overtime costs while ensuring reliability.” It has also promised a dedicated team to start reviewing Hydro operations starting this year to find savings — and to give that team a fixed cost-cutting target.

The utility is also looking at “an assessment of the effectiveness of current planning and work execution methods against industry standards and best practices; a review of the size and composition of the vehicle fleet in an effort to potentially reduce the overall size, and improve the efficiency of, fleet assets; a review of travel guidelines and mandatory use of cost effective preferred hotels; a review of communication infrastructure costs; a reduction in janitorial and building security coverage; an adoption of technology to convert paper based mail-outs to email where possible; and a review of the deployment of cellphones in an effort to reduce the overall number required.

This comes after costing-cutting in 2016 that included “eliminating all conference and related travel, including that whish was also training in nature,” rolling back all training to solely mandatory training, and reviewing all contracts and service agreements to reduce costs, including things like vegetation management on power lines.

All in all, it looks like fascinating days ahead.

Unless, perhaps, you’re a Hydro witness at the hearings.

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