Future Efficiencies in The Electricity Distribution Sector presented by Don MacKinnon, President...
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Transcript of Future Efficiencies in The Electricity Distribution Sector presented by Don MacKinnon, President...
Future Efficiencies in The Electricity Distribution Sector
presented by
Don MacKinnon, PresidentFebruary 17, 2004
Industry Certainty
Lack of consolidation activity with current opportunity for tax-exempt transfer of assets reflects lack of certainty
Government interference in a commercial entity’s ability to realize a market-based Rate of Return (ROR) minimizes incentive for voluntary consolidation that occurs because a distributor can be confident of reaping the benefit of any resulting increase in efficiency
Industry Certainty
Distributors as Commercial Entities
Uncertainty devalues investment value of distributors
Conditions that contribute to uncertainty:
Requirement for Minister’s approval for distribution rate review by OEB
Proposal on using distributors’ third installment towards a market based rate of return to fund Demand Side Management
Industry Certainty
Industry uncertainty impacts distributor’s decisions on investment in its system, operations and workforce
Efficiency improvements through technical innovation require upfront capital investment
Efficiency improvements of workforce requires ongoing training – a significant investment
Investment in System and Workforce
Industry Certainty
Industry certainty is required to provide a healthy work environment for workforce that results in efficiency enhancement
Uncertainty creates stressful work environment and low workforce morale that is not conducive to efficiency improvements
Industry Certainty
Confirm commercial status and give commitment to treat distributors as commercial entities
or
Introduce legislation establishing distributors as non-commercial, non-profit entities
Clear declaration of distributors’ status
Stability
Healthy electricity industry requires skilled workforce
Industry restructuring must ensure stability for workforce
Requires smooth transition
Uncertainty among workers impacts efficiency
Stability
The Electricity Conservation and Supply Task Force (ECSTF) identifies the importance of addressing the need for skilled workers as the electricity industry goes through a major demographic shift.
Stability
Service territory issues
Efficiency initiatives through voluntary, commercial arrangements
Voluntary consolidation
Service Quality and Reliability
Need to invest, not only in system, but equally in skilled workforce
Cutting training to cut costs results in inefficiency and deterioration of service quality and reliability
Uphold Board’s objective “To protect the interests of consumers with respect to prices and the reliability and quality of electricity service”
Service Quality and Reliability
Centrally coordinated training program
Central manpower system for recruitment
Summary
The Government needs to clarify distributor status as commercial entity or non-profit
Stability for the highly skilled distribution workforce is essential to realize efficiency and maintain service quality and requires smooth transition
Continued investment in training and hiring of workforce essential to maintain service quality and reliability
The PWU will continue to ensure effective membership representation through all means
available