Tuesday, December 26, 2006

“This was an abusive relationship and I’m glad it’s over”

A quote from recently-jettisoned Hydro One CEO Tom Parkinson, from a Tom Adams-penned piece in the December 21st National Post. It bears reading if you missed it. Adams’s thesis is that Parkinson did a good job, with measurable results. Parkinson’s expenses detailed in the recent Provincial Auditor’s report were in fact legitimate office expenses; others were part of his compensation package and properly approved. Adams argues that the real reason the McGuinty government showed Parkinson the door (and paid the $3-million severance to which he was contractually entitled) is that Parkinson was too critical of government interference at Hydro One. Some excerpts:

Parkinson had sought to control bloated industry-wide pay scales left over from Ontario Hydro. In 2005 Parkinson, challenged the inflated compensation demands of Hydro One’s management union. With his board’s support, Parkinson drew his line - existing entitlements would remain but new staff would only get market rates. Parkinson’s prepared so well for the negotiations that when the union struck for 105 days and consumer demands hit records, the lights stayed on. Unable to take the heat as the strike worn on, Premier Dalton McGuinty caved to the union, thereby saddling consumers with excess costs more than $100-million per year.

In March, speaking to a trade association, Parkinson let fly. Government had mired critical projects in duplicated bureaucracy and indecision. New transmission to accommodate the government’s nuclear and wind power purchases in Bruce area are so stalled that massive amounts of power, already paid for, will stay locked in and wasted.

One option the government did not have was firing Parkinson for cause. When he took the helm, he refocused the company on its core wires business. As a result, Hydro’s performance is way up. Serious accidents dropped from 95 to 68 per year. High-voltage customer satisfaction more than doubled to 91% in 2006. Interruptions at key delivery points dropped from 0.8 to 0.6 events per year. The grid around Toronto was reconfigured on time and budget, including a completely new high-voltage transformer station. Hydro One finally got around to cleaning up dangerously overgrown rural lines neglected by the old Ontario Hydro. A new Grid Control Centre was completed in Barrie on time and budget in 2004. Two months ago, it was certified by the continental power reliability regulator as best in class in North America. Hydro One’s credit rating also improved; progress that will directly save consumers tens of millions.

John Tory came closest to the truth, demanding to know why $3-million in severance was paid since the government claims that Parkinson resigned.

The government’s claim of resignation is a deliberate half truth. Hydro One’s board of directors remained united in their support for their embattled CEO to the end. On Dec. 7, under direct political pressure and Question Period in high rant, Hydro One’s board held an emergency meeting. All in attendance realized the board member’s jobs were at risk.

A deal was stuck. In a tacit admission that there never was cause for firing, the government accepted the contractual severance in return for a resignation. To make its views clear, the board issued a public statement announcing Parkinson’s departure, heaping praise on his contribution.

Parkinson also accepted the deal. “I had no effective alternative. This was an abusive relationship and I’m glad it’s over,” he said in an interview. “This was about commercial compensation in a business that is about to lose the commercial mandate and become a Crown corporation. The writing is on the wall for others.”

What can we expect? Parkinson again. “H1 is too complex, too valuable and too important to the Ontario economy to be in government hands. Career politicians and mediocre ex-CEOs are not up to the complex challenge of running companies like these. The price of chronic government interference is enormous.”

1 comment:

Anonymous said...

What a shame for Ontarians and for Canada as a whole that the culture of trust in government is so ingrained. Government captures university graduates whose highest and best principle was to get a degree and get into the public service. Business people shun public service, because they know it is a rabbet warren of bitter vetch and backbiting clawing and assassination of character. THats how one gets ahead in the PS ...so this gentleman is absolutely correct in saying the hydro business is too important to be left in the hands of mediocre people such as bureaucrats who have never run a successful business and career politicians, for whom the same negative characteristic applies. Too bad. Canadians are too stupid sometimes. They keep electing Liberals who's defining feature is Big Government is Best !