Hydro One working harder
NOW THAT HYDRO ONE HAS CHANGED FROM A CROWN CORPORATION TO A PUBLICLY TRADED COMPANY, WHAT HAS CHANGED?
Hydro One is a company that has been around for more than 100 years, but with the initial public offering and the move to a publicly traded company, Hydro One is changing the way it does business. In particular, we are now focused on putting customers first and, at the same time, ensuring ongoing investment into the reliability of the electricity system.
One of our strengths as a company has always been our skilled and hard-working men and women who are dedicated to maintaining the system and restoring power immediately when our customers need it the most – often in the toughest weather. We are building off that dedicated effort and applying the same thinking to improving the way our customers interact with us in every capacity. Over the next 12 months, we will be focused on stepping up our customer service performance, and we will be delivering a suite of customer service enhancements including a redesigned bill, paperless billing and high usage notification to name a few, that will make it easier for customers to do business with us the way they want to.
In addition to improving our customer service, Hydro One is committed to improving the quality of life in the communities we serve. We live in the communities we serve, and we are proud to call these communities home. Our employees are active volunteers where they live – they coach kids’ sports teams, raise funds for local causes and serve on local school councils and community boards.
In addition, our employees and pensioners have raised more than $1.2 million this year through our charity campaign. And as a company, we have sponsored community events and provided donations and grants exceeding $2 million in 2016, benefiting more than 42 communities including 21 First Nations communities. Going forward, our communities can expect more support.
DO THESE IMPROVEMENTS ALSO MEAN THAT COST TO SERVE CUSTOMERS WILL INCREASE?
We are accountable to our customers and to our shareholders. Being a customer-centric, well-managed company provides us the flexibility to develop plans for cost savings and efficiencies that we can translate back to our valued customers. We are working to keep our costs down and keep any increases on our portion of the bill to what is required to ensure that electricity is delivered to our customers when and where they need it. We remain committed to establishing a formi- dable world-class, customer service-focused electrical services company.
WHAT IS HYDRO ONE DOING TO ADDRESS CUSTOMER CONCERNS ABOUT HIGH BILLS?
We are well aware that many Ontarians are feeling the pressure of increases on their monthly electricity bills. Affordability of electricity is a concern for many Ontarians. At Hydro One, we are paying attention to this, listening to customers and finding ways to do our part at keeping our portion of the bill as low as possible. We are doing this by becoming more productive, reducing costs and making prudent investments in our system so that we can continue to provide reliable and safe service while keeping the cost to our customers down. We are also working with customers directly in their communities to provide meaningful conservation programs and opportunities so that they can take further control of their consumption. You will also see us advocating on behalf of our customers with respect to matters of affordability.
WHAT IS HYDRO ONE’S PORTION OF THE BILL? WHAT OTHER CHARGES DO CUSTOMERS INCUR?
At Hydro One, we are in the business of delivering electricity. We do not generate. Hydro One has direct control over only the delivery line portion of the charges on a typical customer’s bill. Out of every dollar of a typical Hydro One bill, about 37 cents is directly attributable to our service and is kept by us to keep that service going.
The biggest portion – 50 cents – is the cost of the electricity from electricity generating companies with the following forms of generation: nuclear, hydroelectric dams, natural gas, wind, solar and biofuel. We collect those charges through the bill and pass them back to the generators with no markup. The other charges on the bill include HST and regulatory charges.
It’s also important to keep in mind that we don’t set the policies that determine how some of the costs are allocated. Rates and density classifications are regulated and not set by Hydro One. We feel that it’s important for our customers to know all the costs that go into the bill we send them so that they have a true perspective of how those costs are applied and who receives the money. As a result, a new bill format is on its way to help our customers do just that, understand where the money is going.
HOW DO YOU DETERMINE HOW MUCH TO CHARGE FOR DELIVERING ELECTRICITY TO CUSTOMERS?
The Ontario Energy Board sets the amount we are allowed to charge customers for our delivery service based on our rate applications. We have to apply for approval to set the delivery charge rates, and our applications go through an intensive review process over many months. We have to show that we are committed to ensuring our rates are an accurate and fair reflection of our costs and that we seek only to recover costs that will allow us to make prudent investments in the electricity system so we can continue to provide a safe and reliable service.
In 2016, Hydro One’s distribution rate increase added only 0.4 per cent to the total bill of a typical residential customer consuming 800 Kwh a month. This increase was to help replace and maintain equipment nearing its end-of-life or damaged by storms, as well as building and upgrading stations, transformers, lines and poles to meet customer growth.
HOW MUCH PROFIT DO YOU MAKE FROM THE ELECTRICITY YOU SELL TO YOUR CUSTOMERS?
Ontario’s electricity service companies like Hydro One are not allowed to make a profit on the electricity they buy for their customers, so we charge no more than we pay – it is purely a cost recovery. The return Hydro One is able to earn for owning, operating and maintaining the distribution system is regulated by the Ontario Energy Board. In 2016, the return on equity was 9.19 per cent. Since 2010, the range has been from 8.93 per cent to 9.85 per cent.
HOW MANY CUSTOMERS DO YOU HAVE, AND WHERE DO YOU OPERATE?
We proudly deliver electricity to 1.3 million customers throughout the province, and provide and maintain the vast infrastructure required to keep the lights on. We operate in suburban, rural and even remote areas. Through our Remote Communities subsidiary, we operate and maintain the generation and distribution assets used to supply electricity to 21 communities – many of them First Nations communities across northern Ontario that are not connected to the province’s electricity grid.
HOW IS HYDRO ONE DIFFERENT FROM OTHER UTILITIES IN ONTARIO?
We are the biggest electricity transmission and distribution company in the province. As a largely rural electrical services company, we have a lot more ground to cover than the urban utilities like Hydro Ottawa and Toronto Hydro. Our customers are spread out over the entire province rather than within one municipality. Our service territory is twice the size of France, covering more than 640,000 square kilometres. We own and operate most of Ontario’s electricity transmission system, transporting 98 per cent of the electricity consumed in Ontario by revenue.
We are also the only publicly traded transmission and distribution company in Ontario. Our accountability is to our customers and our shareholders. We have established a strong market presence with broad investor appeal. This gives us the latitude to take care of our customers while growing and expanding the business.