#hydro one

The saga of the “Six Million Dollar Man” has spilled over into the Hundred Million Dollar Manhole.

That’s how much money has gone down the drain at Hydro One thanks to Doug Ford’s costly campaign stunt, culminating with a botched takeover bid and a $103-million kill fee. Never have Ontarians paid so heavy a price for such cheap sloganeering, with the meter still running on lawyers’ bills.

That our fearless, feckless premier could fire the (admittedly overpaid) CEO of Ontario’s electricity transmission utility without financial consequences was always the stuff of television fantasy. When you mix business risk with political recklessness, and personal arrogance with governing incompetence, you are on the hook for what happens.

Washington State regulators say they have denied Hydro One Ltd.’s proposed takeover of Avista Corp. citing political interference in the Ontario utility by the Doug Ford government.

The Washington Utilities and Transportation Commission says it found the deal, which valued Avista at $6.7-billion, to not be in the public interest after it became clear that the Ontario government was willing to interfere in the utility.

Hydro One and Avista Corp. say they have agreed to cancel their merger after regulators in Washington state and Idaho shot down the deal.

The energy companies say that after weighing their chances of  getting those decisions reversed, both their boards of directors decided it was best to call off the plan.

They say under the terms of the merger agreement, Hydro One must now pay Avista US $103 million in termination fees.

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The request was issued after regulators found that the $6.7-billion planned merger would not sufficiently safeguard Avista customers from the whims of the Ontario government, which is Hydro One's largest shareholder.

The regulator has pointed to Premier Doug Ford's efforts to force former Hydro One CEO Mayo Schmidt to retire —which was followed by the resignation of the utility's entire board — as a sign that the province was willing to put political interests above those of shareholders.

Premier Doug Ford may not have outright lied this week about the cost of fulfilling his election promise to get rid of Hydro One CEO Mayo Schmidt.

But he certainly grossly misled taxpayers when he crowed that the payout to Schmidt for stepping down “was zero … absolutely zero.”

In fact, Schmidt is likely to end up with an amount closer to $9 million, mostly in stock options, not the mere $400,000 that Ford claimed he received as a retirement severance payment.

And that doesn’t include the $4.9 million that the 14 members of the Hydro One board who resigned, apparently under threat of having their contracts ripped up, reportedly stand to collect.

None of this lives up to Ford’s promises in Thursday’s Throne Speech to “rebuild trust between the people and their government.” Nor does cooking “up a deal behind closed doors,” as NDP Leader Andrea Horwath put it, create the transparency expected of any democratic government.

The 10 new members include Tom Woods, a former vice chairman at Canadian Imperial Bank of Commerce who will act as interim board chairman, Cherie Brant, a partner at law firm Dickinson Wright PLLC, and Timothy Hodgson, managing partner at Alignvest Management Corp.

“This highly-qualified board has strong governance and industry experience and brings with them significant electricity, business and capital markets expertise,” Hydro One’s acting Chief Executive Officer Paul Dobson said in a statement on Tuesday.

The previous board resigned along with former Hydro One CEO Mayo Schmidt in July after Ford fulfilled an election promise to oust management as part of a drive to lower electricity costs in Canada’s most populous province. Multiple Bay Street analysts downgraded Hydro One’s stock shortly thereafter, while noting risk to the company’s pending merger with U.S. power supplier Avista Corp.

The PC Party has chosen Tom Woods as the interim chairman of Hydro One. Woods worked for the CIBC for 37 years and was on their executive team before he became their chief risk officer in 2008 after the bank’s exposure to the subprime mortgage market in the United States. The exposure “caused some analysts and investors to question the credibility of the bank's executives and directors.”

If elected premier of Ontario in the spring election, Doug Ford says his first act will be to fire the CEO of Hydro One and its board of directors, whom he blames for the rising electricity costs in the province.

The decision, however, would not come cheap.

Hydro One CEO Mayo Schmidt, who earned a $6.2-million salary last year, would be entitled to at least $10.7 million in severance if he were to be removed from his job by the board of directors, according to the company’s annual shareholders report released on March 29.

Promised three months ago as the “first act” of a Doug Ford government, the firing of Hydro One boss Mayo Schmidt — whom the new premier dubbed the “$6 million man” — has fallen down the priority list.

“We are working on that issue right now,” Government House Leader Todd Smith said Tuesday in outlining the new Progressive Conservative administration’s aims as the legislature is recalled for a couple of weeks.

Smith, the party’s energy critic in opposition, acknowledged the new PC government has not been able to make good on the promise while it dealt with other matters, such as axing the Green Ontario Fund that helped consumers save money on smart thermostats and energy-efficient windows.

Hydro One’s credit rating has been downgraded because of the PC Party’s decision to remove Hydro One’s CEO and board. This report describes that decision as a “governance deficiency” which “undermines the effectiveness of the company's governance structure, and potentially promotes the interests and priorities of the Ontario government above those of other stakeholders.”