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Hydro One issued more than 100,000 faulty bills: Ombudsman

Hydro One president and CEO Carmine Marcello responds to a report on Hydro One billing practices and customer service from Ontario Ombudsman Andre Marin at a press conference in Toronto on Monday, May 25, 2015.

Hydro One issued faulty bills to more than 100,000 customers, lied to the government and regulators in a bid to cover up the problem, then spent $88.3-million in public funds to repair the damage.

Ombudsman André Marin delivered this damning assessment Monday, in a report that detailed thousands of cases of egregious over-billing by the electricity company – including a senior citizen in Timmins who had $10,000 pulled from his bank account without warning, and a ski resort that unexpectedly received a bill for $37-million.

"Like a lot of huge, monopolistic organizations, Hydro One lost sight of its duty to the public," he said Monday at Queen's Park. "It was so focused on the technical side of its new system, it failed to consider the impact it was having on customers."

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The investigation will likely be Mr. Marin's last into Hydro One. Premier Kathleen Wynne is planning to take away the right of Hydro One customers to complain to the Ombudsman about problems.

The Liberals' omnibus budget bill contains a provision to strip Mr. Marin and six other independent watchdogs of their power to investigate Hydro One. The Liberals want to remove independent oversight of the agency as part of a plan to privatize it.

Mr. Marin urged Ms. Wynne to reconsider. He said many of Hydro One's problems were only solved because of his investigation. He pointed to ORNGE – Ontario's air ambulance provider that became embroiled in a series of financial scandals – as an example of a government agency that lost public oversight.

"To think that removing the Ombudsman and privatizing it – all these problems will go away – is a little bit like living in a fool's paradise," he said.

But the Premier was unbowed. She said Hydro One will be "better run" as a private corporation.

"I am confident that the company will be better run because that, again, is another part of this process," she said Monday. "It is going to be a different entity. It's going to have different controls on it."

Energy Minister Bob Chiarelli suggested that the government has to remove independent oversight of Hydro One to please investors, who will ultimately decide how much they are willing to pay government to buy the company.

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He said keeping oversight of the company "is not a practical solution … that would not be friendly to the securities sector."

Mr. Chiarelli also reiterated a plan to create a new, corporate ombudsman within Hydro One to handle complaints. The corporate ombudsman will be less powerful than Mr. Marin, reporting internally to Hydro One's board instead of the legislature.

Mr. Marin derided corporate ombudsmen as "ombuddies" and "ombudsweenies" who are too friendly with their corporate masters to raise serious problems.

Hydro One's billing problems began as a result of glitches in its new computer system. Some customers received bills inflated by thousands or millions of dollars, others received no bills for months only to have them all arrive at once.

Instead of rapidly fixing the problem, the company mishandled its response, Mr. Marin said. In one case, he said, an Ottawa man charged $11,000 for five years' worth of electricity he had already paid for had to spend an entire year fighting Hydro One to get his bill fixed. The problem was not solved until Mr. Marin's office intervened, he said.

The company also pressured its outsourced call centre, which was handling the complaints, to keep conversations with complainants as short as possible to save on cost, he said.

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Hydro One also "deliberately kept the situation under wraps," Mr. Marin said, trying to "deceive" the energy minister and the province's electricity regulator by making it seem the problem was a lot smaller than it actually was.

On one occasion, Mr. Chiarelli's chief of staff asked about billing problems and Hydro One told him they affected only 22,000 customers when the correct figure was actually 100,000, Mr. Marin said. In other cases, he said, they gave different answers on the number of people affected by the problems.

"They obstructed, and lied to, the Minister of Energy's office when they asked questions, the board of directors and the Ontario Energy Board," Mr. Marin said. "Trying to deal with Hydro One math is like trying to pin down a kangaroo on a trampoline."

Hydro One CEO Carm Marcello denied lying to Mr. Chiarelli's staff. He said that the number of customers affected by the billing problems fluctuated constantly, which explains the different numbers Hydro One kept giving out.

"Not at all," he said when asked about the accusations of dishonesty. "We provided regular updates to our board of directors, our management team, and we provided all the updates to all of the agencies…As one can imagine when implementing such complex technology, the issues got away from us. But clearly we were able to resolve those issues and focus on solving the customer problems."

Mr. Marcello said the company is making changes to fix all of the problems Mr. Marin identified. He confirmed the company spent money to repair the damage, which he said will come out of the company's profits which are paid to government.

"We had a problem with our billing system. And we focused on fixing the technical issues but we failed to appreciate how our actions would affect our customers. We let them down and then we didn't treat them well when they had a problem," he said. "I'm sorry we put our customers through that negative experience and they felt that they had no recourse but to go to the Ombudsman."

The opposition parties said the problems at Hydro One demonstrate why it should not be swiftly privatized and removed from Mr. Marin's oversight.

"The culture at Hydro One needs to change. Selling any portion of it won't necessarily accomplish this," said Progressive Conservative Leader Patrick Brown. "I don't think [the billing problems] would have come to light if it wasn't for the ombudsman."

NDP Leader Andrea Horwath said only an independent watchdog reporting to the legislature, as Mr. Marin does, can provide enough oversight for the company.

"Having the…legislative authority to go into that corporation – that public corporation, that Crown corporation, and do the digging and do the research and compel documents and compel witnesses so that they can get to the bottom of what the problem is – that's an extremely important tool and it's a tool of the people of Ontario and that tool will be lost when this gets sold off," she said.

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About the Author
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

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