Remarks to Ottawa City Council

Transcription

1 HYDRO OTTAWA HOLDING INC. Remarks to Ottawa City Council Pierre Richard, Q.C. Chair of the Board Bryce Conrad President and Chief Executive Officer Wednesday, June 26, 2013 (Please Check Against Delivery)

2 Pierre Richard, Q.C., Chair, Board of Directors [Slide 1 cover slide] Good morning Mayor Watson and members of City Council. It is a pleasure to be here once again to report on Hydro Ottawa s performance, and the positive results the company has achieved for you, our shareholder, and for our community in With me today is Hydro Ottawa s President and CEO, Bryce Conrad; Norm Fraser, our Chief Operating Officer - Distribution and Customer Service; Greg Clarke, our Chief Operating Officer Generation; and our Director of Finance, Geoff Simpson. I would also like to recognize the contribution of the four individuals who represent you, as the Shareholder, on our Boards of Directors: Councillor Hume, Councillor McRae and Mayor Watson represent Council on the Board of Hydro Ottawa Holding Inc.; and Councillor Monette serves on the Board of Hydro Ottawa Limited. As in previous years, Mr. Conrad and I will provide a brief overview of Hydro Ottawa s performance, after which we would be pleased to answer your questions. [Slide 2 First Year of Performance under New Strategic Plan] As you will recall, in June of last year, we presented to City Council a refreshed version of our strategic plan, setting out new financial projections and strategic objectives for a five-year period. In our first year of performance under this plan, Hydro Ottawa advanced key elements of our business strategy, while achieving strong financial results that surpassed our targets for the year. The company is on solid financial footing, and is positioned for continued success and leadership in the electricity sector. Page 2 of 11

3 [Slide 3 Net Income vs. Plan] In terms of financial results, Hydro Ottawa s 2012 net income of $31 million exceeded our strategic plan projection by $3 million. This resulted in an annual dividend to the City of $18.6 million, exceeding our target by $1.8 million. This continues a trend of consistently positive financial performance in recent years, and is in fact our highest dividend to date based on annual results. [Slide 4 Shareholder Value] Since we paid our first dividend in 2005, Hydro Ottawa has delivered $139.9 million in dividends to you, our shareholder, for City of Ottawa priorities. If we consider earnings retained within the company as well as dividends paid during the year, shareholder value increased by 14 percent in In other words, Hydro Ottawa continues to be a sound and rewarding investment for the City of Ottawa. [Slide 5 Laying the Foundation for Future Growth] We continue to achieve these results through a combination of growth in revenues and stringent cost control. On the revenue side, the growth of our renewable generation business is and will continue to be important to shareholder value. The purchase of three additional hydroelectric facilities at Chaudière Falls in 2012, and the growth potential that exists at that site, is a strategically important development for our company. This acquisition, combined with the growth of our landfill gas to energy operations, has allowed our company to double its green energy capacity in one year. Hydro Ottawa is now the largest municipally-owned producer of green power in Ontario, and is positioned as a long-term player in that industry. Page 3 of 11

4 Our success in building a stable and profitable renewable energy business has been driven by a cautious approach to expansion, linked to long-term pricing agreements for the power we produce. This approach minimizes risk, and provides stable long-term returns for our shareholder. The Chaudière transaction has increased our hydroelectric capacity from 17 to 38 megawatts, with the potential to expand to as much as 60 megawatts in the future. [Slide 6 Stable Distribution Rates] I mentioned that cost control has also been and will continue to be an important focus for our company. This is particularly the case in our core electricity distribution business, where we strive to provide the highest quality of service in the most efficient manner possible. In 2012 we ranked in the top 15 percent in our industry in terms of lowest cost per customer, as measured by the Ontario Energy Board. Only about 20% of what customers pay is kept by Hydro Ottawa, and we are pleased that we have been able to keep this portion of the bill very stable over the past several years through effective cost control and efficient operations. [Slide 7 Significant Achievements] We are pleased with the company s performance in When we look at financial results, value to our customers and our shareholder, and progress on strategic objectives, it has been in many ways a banner year for the company. I would also like to take a moment, however, to reflect on the company s progress from a longer-term perspective. I have had the privilege of serving as Chair of Hydro Ottawa s Board of Directors since 2004, and prior to that, of serving on the company s Advisory Board. Over that period, I have witnessed the steady progression of Hydro Ottawa to become one of the best-performing municipal utilities in the province of Ontario an asset in which you, as the shareholder, can justly take pride. Page 4 of 11

5 This AGM brings to a close my nearly nine years as Chair of the Board. It has been an honour and a privilege to serve the residents of our City in this capacity, and that privilege has been greatly enhanced by the opportunity to work along-side individuals of the highest competence and integrity. I would like to recognize and thank the tremendous men and women who work at Hydro Ottawa, the company s excellent management team, and my Board colleagues, past and present, for their outstanding contributions to Hydro Ottawa and to our community. And I would like to thank City Council for the trust and confidence you have placed in each of us. Today, Hydro Ottawa is a tremendous City asset, and an integral part of our local economy. Allow me to share with you just a few of the highlights of what has been achieved over the past nine years: Telecom Ottawa was built into a profitable and valuable business that was sold for $63 million in 2008, resulting in exceptional dividends to the City of Ottawa; Normalized net income has grown from $5.7 million in 2004 to $31 million today; From our first dividend of $12 million based on 2005 performance, Hydro Ottawa has now paid dividends totaling $139.9 million, including this year s dividend of $18.6 million; When dividends and retained earnings are considered together, $257 million in shareholder value has been created since 2004; Faced with an unprecedented level of retirements in our skilled workforce, the company has built industry-leading in-house apprenticeship programs that have graduated 41 journeypersons in five electrical trades; We have created executive development and management succession programs that have ensured continuity of leadership for the company, and have attracted top talent from outside of the organization when required; Page 5 of 11

6 We have fostered an engaged and productive culture within the organization. From an acrimonious labour disruption in 2004, the company is now recognized as a leader in employee engagement; and As I mentioned earlier, we have built our renewable energy business into the largest municipally-owned green power producer in the province. In sum, I believe Hydro Ottawa has made dramatic progress toward its vision of being a leading, trusted, integrated utility services company, and that the company is poised for continued success in the future. And the company will approach that future with a Board, management team, and workforce whose commitment to teamwork, excellence, service and integrity is second to none. I will now turn the floor over to Hydro Ottawa s President and Chief Executive Officer, Bryce Conrad, for some additional remarks. Page 6 of 11

7 Bryce Conrad, President and Chief Executive Officer [Slide 8 transition slide Strategic Direction] Thank you Pierre, and on behalf of Hydro Ottawa, its more than 650 employees, and all of the members of the executive team, I want to personally thank you for your steady and far-sighted leadership of the company, and your service to our community. Under your Chairmanship, Hydro Ottawa not only completed the process of melding 5 organizations and cultures into a single company, but emerged as one of the most innovative and effectively run utilities in Ontario. The things you have emphasized and insisted upon as Chair things like leading governance practices, preparing our workforce for the future, and an unwavering commitment to the customer have and will continue to serve the company well, with lasting benefits to our shareholder and our community. Pierre mentioned that 2012 was our first year of performance under our new Strategic Direction, which covers the period Under that plan, our longstanding objective to deliver value to the customer takes on central importance. The essence of our business strategy is to put the customer at the centre of everything we do. To that end, I want to briefly update you on our efforts to enhance customer value before turning the floor over to you for questions. [Slide 9 Customer Satisfaction] Our overall customer satisfaction rating, at 90 percent, showed improvement over 2011, and continued to outperform the provincial average. There were also noticeable year over year gains in customers ratings of our courtesy, knowledge, and ability to address inquiries on the first call. Page 7 of 11

8 [Slide 10 Enhancing Communication with the Customer] We also continued to innovate, to improve the customer s experience with Hydro Ottawa. In 2012, we enhanced our online outage maps, increased the range of services offered through MyHydroLink, our customer service Web portal, and launched a mobile application that lets our customers track and manage their accounts anywhere and anytime. We also enhanced our efforts to engage customers through online social media such as Twitter and Facebook, as part of our strategy to communicate with customers on their own terms when and how they want to communicate. In recognition of our efforts to enhance customer self-service options, Hydro Ottawa was recognized in 2012 with the Electricity Distributor s Association s Customer Service Excellence Award. [Slide 11 Helping Customers to Conserve] Helping our customers to conserve energy and save money continues to be a big focus of our customer engagement efforts. Since we began offering energy conservation programs in 2005, we have helped our customers to conserve 543 million kilowatthours of electricity enough to power more than 56,000 homes for a year. We have educated more than 155,000 elementary students in our community on electricity safety and conservation through free presentations in Ottawa schools. And we continue to offer a broad range of conservation programs and incentives for both residential and business customers. Over the past couple of months, a number of Councillors have been helping us to promote our saveonenergy Small Business Challenge, which offers small businesses up to $1,500 in free lighting upgrades, as well as a professionally installed touch screen, programmable thermostat through our peaksaver PLUS program. It s a great opportunity for small businesses and a chance for one of our City s wards to earn bragging rights as a conservation leader. At last count, Councillor Hobbs and Kitchissippi Ward are leading the way with the most new participants, followed closely by Councillor Chiarelli and College Ward. Page 8 of 11

9 [Slide 12 - Reliable Electrical Service] In addition to customer engagement and help with conservation, reliable electricity service is always at the heart of our commitment to our customers. Service reliability improved in 2012 compared to the previous year, when we were impacted by several major storms. However, the number and duration of outages remained above our historical averages. This reflects the industry-wide challenge of aging infrastructure, and illustrates the need to make accelerated investments to replace and upgrade equipment. And we are doing just that. We made record infrastructure investments in 2011, and increased our level of investment still further in 2012, investing a total of $109.3 million in capital projects to keep our distribution system safe, reliable and efficient. We intend to maintain a similar level of investment over at least the next five years, to ensure our customers benefit from the industry-leading reliability they have historically enjoyed. In addition to increasing our investments system-wide, we continue to watch for troublespots that are experiencing below average reliability, and take immediate action to improve service in those areas. For example, we have intensified our focus in Kanata South and Stittsville, and have ramped up our investment activities in those communities, working closely with Councilors Hubley and Qadri. In 2012, we spent $11M in this area, and we plan to invest a further $8M in The new Terry Fox transformer station will be completed and energized this fall, and will help to ensure reliable service to our customers in the west end. We are also increasing our focus on parts of Hintonburg, Alta Vista, Beacon Hill, Orleans and south Gloucester, where some circuits have performed below our expectations, and will be working closely with Councillors representing those areas as well. Page 9 of 11

10 [Slide 13 Lending a Helping Hand] When outages do occur, our employees respond quickly, often in adverse conditions and regardless of the time of day or night, to get the electricity flowing again as quickly as possible. Having been with the company almost two years now, I can tell you that they do so not only in a professional manner, but also with a great deal of pride. They re proud to be the guys in orange who bring a unique set of skills that our community depends upon very heavily. That pride and dedication was on full display, and reached beyond our own community, in the wake of Hurricane Sandy last October. We had a rare opportunity to lend a helping hand to communities south of the border who were in need of the special skills that only trained and experienced powerline maintainers can bring. Hydro Ottawa sent two crews of 13 employees to Connecticut and New Jersey, to help restore power to communities that were hard-hit by that devastating storm. The gratitude they received was matched only by our pride in being associated with them, as a company and a community. It was a poignant reminder that our employees are dedicated not only to service, but also to giving back to their community and their neighbours and occasionally those neighbours a little further afield. [Slide 14 Recognition] Our employees are also the major driver of our business performance, and I want to acknowledge the crucial role that they have played again this year in our success. They are the first responders in good and bad weather to ensure that our citizens have safe and reliable electricity. And their hard work and dedication is the reason Hydro Ottawa was named the Ontario Energy Association s Large Company of the Year in As we continue to implement our strategic plan, we will maintain our focus on providing value to you, our shareholder. We will maximize the value we provide to our customers. Page 10 of 11

11 And we will continue to build a highly effective and efficient organization. Thank you for the opportunity to present these results. Pierre and I would be happy to answer your questions. Page 11 of 11