Hydro One Case

Enterprise Risk Management at Hydro One

1) What are Hydro One’s business strategic objectives?

Hydro One CEO Laura Formusa made a Strategic Plan to make her company the best transmission and distribution business in North America. The steps needed to achieve this, according to Formusa, is to have the best safety record in the world, top quartile transmission and distribution reliability, 90% customer satisfaction across all segments, top quartile employee productivity, operating efficiency, and an “A” credit rating. Another objective to help this plan for Fromusa is to work out a long-term deal with the unions, preferably around five years.

2) Why are they spending on the Bruce-Milton/Toronto line and the Smart Meters?

As Formusa talked about, the environment is getting to be a bigger issue for the industry. The Smart Meter going hand-in-hand with smart pricing can hopefully reduce use and save customers money, and help customer satisfaction. They also want to bring electricity down from the Bruce nuclear plant on Lake Huron to Milton and the Greater Toronto area because the two lines they have are insufficient. There is a lot of wind generation in the Bruce area.

3) Putting yourself in the shoes of CEO Laura Formusa, what risks does Hydro One face?

There are a number of risks that Hydro One faces. One risk includes the uncertainty involving the government, in particular the upcoming election in Ontario. If the ruling party is re-elected, Hydro One would be expected to lead the initiatives despite their adverse impact on the company’s revenues and earnings. Formusa has doubts whether they can deliever on the government’s conservation goals without compromising its commercial viability. Other risks include the safety issues for the employees, adequate electronic supply, equipment failure, and also issues in the environment.

4) Consider the elements of Hyrdo One’s ERM process. What are its strengths and weaknesses? What recommendations would you...