March 23, 2018
Hydro’s board of directors, except for a PC MLA, has resigned. If Hydro was a private sector company, the board’s action would be a prelude to calling in a bankruptcy advisor and liquidating assets. As it is, it could spell the end of Pallister as premier.
Recognition of the boondoggle should lead to structural changes to save ratepayers and taxpayers. 1. Separate the stranded debt from this fiasco and shift it to the provincial ledger. Pay it off over 30 years. 2. Have annual rate hikes at the rate of inflation until the ‘dust’ settles. 3. Sell off Centra Gas to create some working capital to service debt. 4. Structurally separate the generation and export transmission assets from the local distribution utility. 5. Sell off the export business to long-term investors in the pension and insurance industry sectors. 6. Convert the local distribution systems into consumer-owned cooperatives. 7. Partner with efficient private sector operators to manage the local distribution assets.
To put it bluntly, Hydro is bankrupt, only propped up by the provincial government.
Ever since the government and Hydro launched the folly of investing in new northern dams and export transmission lines without securing adequately priced long-term export contracts, various experts have long predicted this day would arrive. Between provincial administrations and former Hydro executives and board members, a multibillion dollar enterprise has been driven into insolvency.
There is also a need to launch a public inquiry to determine why all the checks and balances of the system failed. Knowledgeable observers saw this slow-motion disaster coming as early as a decade and more before. Hard questions need to be asked about governance, political oversight, the influence of engineering contractors, the competence of executive managers, the advice provided by consultants, and the role of labour unions in this train wreck. None of those parties will emerge looking good, but it is time to ensure a “never again” future for key provincial infrastructure.
Special attention also needs to be placed on the lack of action by the Premier, his cabinet and advisors to grasp the immensity of the problem and take appropriate actions. With the mass resignation, Hydro’s board has expressed a total lack of confidence in the current government.
Pallister had one huge job to do, pull Hydro out of its death spiral. But he and his advisors acted like a deer frozen in headlights. The decision of Hydro’s Board to resign should be respected, they couldn’t fulfill their fiduciary duties under the current circumstances – prevented from exploring restructuring options that could salvage value from the current mess. Don’t buy Pallister’s pathetic ‘Metis’ spin on the board’s resignation. There will be no happy outcome from this situation, only losers and losses.
There needs to be a leadership transplant inside the government, placing knowledgeable people in positions of influence and authority. Quit hiring consultants to produce requested reports protecting executives, politicians and bureaucrats. Bring in bankruptcy and insolvency trustees to perform a work-out.
Dealing with the ruin will be painful, but immensely worse would be to maintain the operation as a walking dead zombie organization destroying our economy.
The mass directors’ resignation screams out the need transform the leadership of the existing provincial administration. If PC party elders do not act now, the future of the PC party will come into question.