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The company is supporting a lot of local contractors. Do you think they waste money because of incompetence or corruption?

• bcrl 5y ago
  Actually, Hydro One doesn't use local contractors all that much as it's heavily unionized. Even in discussions about permitting, hands are often tied as it is almost impossible to assign work previously done by union employees to external contractors or even those of us submitting permits. For the last few years Hydro One has been trying to reform its internal processes for permits, and the folks in charge of that get huge amounts of push back internally, making the pace of change abysmally slow even though everyone knows they have a problem. There is also the perverse incentives of operating a regulated utility. As they are usually the monopoly LDC in a given area, the amount profits they are permitted to generate are limited relative to their costs (somewhere around 10-15% iirc). This creates a perverse incentive to inflate costs as they are then permitted to generate larger profits. If they reduced costs and profits grew too large, they would be forced to lower rates, which is clearly a bad thing in the view of Hydro One management.
  • mleonhard 5y ago
    Thanks for explaining the root cause.