Bat­tling bloat

The Compass - - EDITORIAL - This edi­to­rial orig­i­nally ap­peared in The Telegram

h, thank good­ness for the fine print.

You might not know about this, be­cause it’s buried deep in a 138-page, 79,000-word board or­der, but the prov­ince’s Pub­lic Util­i­ties Board is clip­ping the wings of New­found­land and Labrador Hy­dro, or­der­ing that an in­crease in salary costs not be passed on to ratepay­ers in Hy­dro’s re­quest for a gen­eral rate in­crease.

Some of the num­bers that the board found to be a con­cern? The fact that non-union salar­ies at Hy­dro have in­creased by 57 per cent be­tween 2007 and 2015, and that the av­er­age full-time salary across the Crown cor­po­ra­tion has risen in that same time pe­riod from $59,453 to $84,704.

This, at a time when the av­er­age in­crease in salar­ies in the prov­ince was 36 per cent.

As well, the board was asked to look at the dra­matic growth in staff at Hy­dro — an in­crease from 813 po­si­tions in 2013 to 903 in 2015.

The board’s take? “While it is rea­son­able to ex­pect that salar­ies and ben­e­fits will in­crease over time, the size of the in­creases re­flected in the pro­posed salar­ies and ben­e­fits costs is con­cern­ing.”

It went on to point out that Hy­dro didn’t ad­e­quately con­trol its staffing costs: “The board finds that Hy­dro failed to demon­strate that these costs were es­tab­lished in a rig­or­ous process which in­volved a sub­stan­tive re­view of re­quire­ments and con­sid­er­a­tion of the avail­able op­por­tu­ni­ties to achieve sav­ings and cost re­duc­tions. Hy­dro did not pro­vide ev­i­dence demon­strat­ing rea­son­able con­trols on salar­ies and ben­e­fits costs.” But that’s not all. The board also took is­sue with Hy­dro’s short­term in­cen­tive pro­gram, sug­gest­ing that the plan fo­cused too much on the fi­nan­cial per­for­mance of New­found­land Hy­dro and its par­ent com­pany, Nal­cor En­ergy, and not enough on pro­vid­ing least-cost, re­li­able elec­tri­cal power.

“Be­fore the costs of any such plan are re­flected in rates Hy­dro will have to demon­strate that the plan pro­vides in­cen­tives for the pro­vi­sion of least-cost re­li­able power and pro­vides a demon­stra­ble ben­e­fit to ratepay­ers,” the board says in its Dec. 1 or­der. The re­sult? “The board finds that the pro­posed 2015 salar­ies and ben­e­fits costs are not rea­son­able in the cir­cum­stances.”

New­found­land Hy­dro will have to ab­sorb $4.4 mil­lion in salary costs from some­where else, and will not be able use them in the rate base that’s used to set power rates in this prov­ince.

The board has also put the util­ity on no­tice to start find­ing sav­ings: “the board ex­pects Hy­dro to im­ple­ment im­proved pro­cesses in re­la­tion to iden­ti­fy­ing, es­tab­lish­ing and doc­u­ment­ing ef­fi­ciency mea­sures be­fore the fil­ing of its next gen­eral rate ap­pli­ca­tion. In the ab­sence of such ev­i­dence the board may con­sider fur­ther dis­al­lowances ...”

Tough talk - but the proof of the pud­ding is in the eat­ing. And in this case, on the num­bers at the bot­tom of your elec­tric bill.

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