TORONTO, Jan. 5, 2012 /CNW/ - The Ontario Energy Board ("OEB") ruled
today to impose the Incentive Regulation Mechanism ("IRM") framework on
Toronto Hydro-Electric System Limited ("Toronto Hydro"). Due to the
gravity of this decision, Toronto Hydro must now take some time to
assess the effect on its operations and determine the steps necessary
to comply with the OEB's order.
In today's decision, the Ontario Energy Board declined to hear Toronto
Hydro's Cost of Service application, filed in August 2011. Over the
past three years, the Ontario Energy Board approved Toronto Hydro's
infrastructure renewal plans. However, this decision will mean
Toronto Hydro will be required to dismantle the grid renewal structure
that has been put in place based on past OEB-approved capital
construction budget levels.
Toronto Hydro's capital spend in 2011 totalled $378 million. Today, the
OEB has cut the capital budget by approximately 65 per cent. This has
far reaching ramifications that will impact not only customer service,
safety and reliability, but employees within the utility and other
industries and suppliers.
Further, with this decision, the asset replacement cycle has been
changed to approximately 97 years from the previously OEB-approved 30
Toronto Hydro, in its submission, made it clear that the IRM framework
will result in the reduction of its capital spending to a level that
will not enable the company to adequately maintain and renew Toronto's
aging distribution system. This will likely result in deteriorating
service, an increase in power outages, an increased risk to public
safety, slower call centre response times, as well as the likelihood of
major workforce downsizing.
Toronto Hydro has made significant productivity improvements. The
utility currently operates with 35 per cent fewer employees than were
in place prior to the amalgamation of the former metropolitan Toronto
SOURCE Toronto Hydro Corporation
For further information:
Blair Peberdy, Vice President