20181214Comment.pdf

From: Mark Ehlinger [mailto:[e-mail]]
Sent: Friday, December L4,2OL8 9:35 AM
Subject: Avista / Hydro One
The Globe&Mail in Canada published another article outlining the Ontario govemment's
interference in the operations of Hydro One. The article outlines that the government would use
"legislative authority" to get its way. See below.
In addition, various media outlets are reporting that if Hydro One acquisition of Avista fails,
Hydro One will be required to pay a "US$103-million termination fee" to Avista. This amount
far exceeds any of the short term commitments that Hydro One has made to Avista ratepayers. In
fact, with this substantial windfall, Avista could use the proceeds to lower rates for ratepayers in
all its states including Idaho and tum this entire situation into a positive for ratepayers.
Article outlining fee: https://business.financialpost.com/opiniorVterence-corcoran-ontarians-
should-be-relieved-hvdro-ones-bizarre-takeover-plan-i s-toast.
Respectfully,
Mark
Ontario government to cap Hydro One CEO
compensation at $l.s-million
LAURA STONE
UPDATED DECETMBER 13 2A1B
Ontario Premier Doug Ford's government has decided to cap the total
compensation for the next CEO of Hydro One at $r.S-million, senior
government sources told The Globe and Mail.
The plan to direct a "hard cap" of $r.S-million in total compensation for the next chief
executive of Hydro One was made at this week's planning and priorities committee, a
meeting with Mr. Ford and the most senior members of his cabinet, the sources said.
Details of the hard cap haven't been finalized, but it could include the salary as well as
stock options and benefits. But sources could not say whether the cap included growth
from stock options. It's also unclear what compensation would be triggered if the person
left.
The sources were granted anonymity by The Globe because the matters were
confidential.
The $r.5-million figure was viewed by Mr. Ford and his cabinet ministers as a
competitive salary, but in keeping with Mr. Ford's campaign promises to rein in
spending at the utility and lower hydro rates, a senior government source
said.
Former CEO Mayo Schmidt had become a lightning rod for resentment over rising
electricity rates during the spring election campaign. Mr. Ford had labelled the CEO "the
six-million dollar man" because of his compensation and promised to fire the executive
if elected. In July, Mr. Schmidt retired and the utility's board resigned
abruptly after reaching an agreement with the new Tory government. Mr.
Ford declared that he'd made good on his pledge, but Mr. Schmidt qualified
for incentives and stock options worth at least $g-million upon retirement.
The board chair of Hydro One has been informed of the government's plans for a cap
and is set to hold a board meeting on Friday, sources said. A senior government
source said cabinet does not want to return to a large executive pay package
and would use its legislative authority to block one.
The Globe and Mail reported last month on a standoffbetween Mr. Ford's government
with the independent directors on the Hydro One board over who will be the utility's
next CEO. Government and industry sources told The Globe that Mr. Ford has his own
favoured candidates to lead Hydro One, including current Toronto Hydro CEO Anthony
Haines.
The province owns a 47-pebcent stake in Hydro One, after the utility was partly
privatized by the previous Liberal government. The lo-person board has six
independent directors and the rest are appointed by government.
A senior government source told The Globe the province fully respects the board's
ability to choose its next CEO, but it needs to be within the compensation framework set
by cabinet. The senior source said the committee also expressed concern about the
compensation the board members were proposing for themselves.
Mr. Ford has promised to slash hydro rates by a further 12 per cent. The Tories have also
passed omnibus legislation that, in part, grants the government authority to approve
executive compensation at Hydro One. The bill requires the Hydro One board of
directors to establish a new compensation framework for the CEO and board of
directors in consultation with the province and the utility's five largest shareholders.
The Progressive Conservatives have already passed their own legislation, known as the
Hydro One AccountabilityAct, which gives the Premier a veto over executive pay. The
new act also requires the company to disclose what it plans to pay senior executives,
something the newboard has not done.
Hydro One chair Tom Woods recently told a Washington state regulator the utility was
considering payrng its next CEO between $z-million and $4-million annually. At the
time, the retired investment banker said the Ontario government had not approved the
board's compensation plan.