Ombudsman Urges Corporate Culture Overhaul, Ongoing Oversight of Hydro One

TORONTO, ONTARIO--(Marketwired - May 25, 2015) - Ombudsman André Marin today called on Hydro One to overhaul its corporate culture to focus on customers and transparency, and urged the government to preserve independent oversight of the utility in the public interest.

Reporting on the largest investigation in his office's history - comprising more than 10,500 complaints - the Ombudsman revealed a litany of egregious problems with billing and customer service arising from Hydro One's disastrous installation of a new customer information system in May 2013, which he estimates affected well over 100,000 customers.

"Hydro One lost sight of its public interest purpose and failed to adequately consider the impact on its customers," he states in the report, entitled In the Dark. "Its overconfidence in its technical superiority fostered complacency. It forgot to consider the consequences to its customers."

The Ombudsman's report details how problems with the system transition resulted in a massive disruption of billing, including overbilling (sometimes by thousands or even millions of dollars), no bills, estimated bills, and outrageously bad customer service during the scramble to fix technical glitches. As the crisis deepened, some at Hydro One "deliberately kept the situation under wraps," Mr. Marin writes, "even deceiving the electricity regulator, my Office and other stakeholders about the extent and nature of the company's billing and customer service disaster."

When calls from frustrated customers flooded in and overwhelmed the company's outsourced call centre, Hydro One directed the private contractor to pressure staff to keep call handling times down, the Ombudsman discovered. In its external communications, it consistently minimized the scope of the problem and cited a survey that showed its customer satisfaction rate increasing from 78% to 80% the year of the botched system launch. Its "customer service recovery" ultimately cost the company $88.3 million.

The Ombudsman announced the investigation in February 2014 in the wake of a spike in complaints about Hydro One. He issued an interim update on the investigation in March 2015, flagging Hydro One's disturbing practice of deceiving the public by threatening to disconnect customers for unpaid bills in winter, despite its policy never to do so.

Even as the report was being finalized, Hydro One conceded there were some 5,000 customers still facing the frustration of going many months without bills or receiving estimated bills, Mr. Marin says, noting: "Hydro One has not yet finished learning its lessons from the corporate catastrophe."

He also points to an October 2014 promise by Hydro One's CEO to post a "customer commitment" document online that was still unfulfilled when the report was finalized six months later.

Noting that Hydro One's "fatal fault" is a "technocratic and inward-facing organizational culture that is completely out of step with public sector values," the Ombudsman makes 65 recommendations to the utility, all of which it has accepted. These include: Better staff training and call quality monitoring; redesigned, clearer bills and a system for issuing refunds, explanations and apologies when warranted; more transparent and reliable statistics; and better communication between management and the board of directors about systemic customer service issues.

He also recommends the government preserve independent oversight of Hydro One once the utility is partially privatized, rather than appointing an internal ombudsman. "My report clearly documents Hydro One's failure to communicate openly, honestly and proactively with its customers, its regulator, Ministry officials and my Office," he writes. "I am concerned that unless accountability is assured through independent and impartial scrutiny, stakeholders may once again find themselves in the dark."

The investigation by the Special Ombudsman Response Team (SORT) included more than 190 interviews with current and past Hydro One executives, frontline staff, stakeholders, and Hydro One's outsourced agencies, as well as whistleblowers and staff from the Ontario Energy Board and the Independent Electricity System Operator. Investigators also reviewed tens of thousands of Hydro One documents and emails.

At the same time, two teams of Ombudsman early resolution officers and investigators also worked with a "SWAT" team at Hydro One to resolve thousands of individual cases, and to flag issues and egregious cases to Hydro One management. The investigation "required extraordinary efforts by personnel in every part of our office," Mr. Marin notes on the report cover.

Since 2005, the Ombudsman's Office has conducted some 34 systemic investigations into issues affecting large numbers of Ontarians, sparking reforms of (among other things) newborn screening, crime victim compensation, property tax assessment, drug funding, and the lottery system. The Ombudsman's recommendations stemming from such investigations have been overwhelmingly accepted.

For the full report, backgrounders and video of the Ombudsman's news conference, go to www.ombudsman.on.ca

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