page added 07/10/18
Hydro One CEO Mayo Schmidt has been in the Utility industry only since 2015. Previously he was an executive in various agribusinesses. He was brought on to straighten out Hydro One as it transitioned from wholly owned by the Province of Ontario to a partially privatized corporation. He is a turn around artist. He knows little about the utility industry.
At the UTC hearing in Olympia May 22, Hydro One CEO Mayo Schmidt and Avista CEO Scott Morris treated the UTC commissioners like they were rubes, with no knowledge of the utility industry. No mention of the $50 Million Severance package shared by 13 Avista executives.
- They cited as a benefit of the sale “economies of scale” for purchasing equipment. Mayo Schmidt specifically mentioned “we have 1.6 million power poles” as an example. In real life, these two systems are built out. The utility industry in North America is fully developed with standard parts used by many large customers. For any purchase of high volume components, such as meters, Avista’s purchase would be sufficient to get any high volume discounts. Nobody is going to buy enough power poles to get a significant discount by pooling Avista and Hydro One purchases, considering that they are separated by over a thousand miles.
- They also cited as a benefit “sharing best practices”. Utility companies share best practices across the industry. On the operations side, people in the utility industry see one another as colleagues, not competitors, since they work for monopolies and don’t compete. Evidence of this sharing best practices is visible every time there is a hurricane that tears up electric utilities. Utility company crews from all over the country respond and have power back up in a week or two. This is due to standardization across the industry and the sharing of best practices.
- The rest of the benefits claimed, covered here, are ludicrous when put in the context of Avista’s net income and the $50.5 severance benefit for 13 Avista executives. Avista could bestow these “benefits” on us at any time without Hydro One.
Televised & recorded Washington Utilities and Transportation Commission settlement hearing, held in Olympia May 22, 2018. https://www.tvw.org/watch/?eventID=2018051081