Paul Waldie
Globe and Mail
July 20, 2002

 The future of Hydro One Inc. became even more cloudy yesterday with the firing of Eleanor Clitheroe.

The utility, one of the largest in North America, has endured a series of upheavals in the past two months. Since June, Hydro One’s entire board of directors has quit, its chief executive officer, Ms. Clitheroe, has been fired and its initial public offering has been scrapped.

The utility will be run by co-CEOs until the board can find another chief executive, all while the company defends itself in a lawsuit from its former CEO.

Meanwhile, the Ontario government, which owns the utility, is trying to find a strategic partner to buy a 49-per-cent stake in it before the end of the year.

"The sale of the minority interest had some huge questions marks before today," said Tom Adams of Energy Probe, a Toronto-based environmental group. "And today’s developments are just going to make a bad situation worse."

Investment bankers were already shaking their heads at the turmoil and changes in direction at Hydro One and few believe the situation is any clearer now.

"The taint of political interference still lingers at Hydro One," a Bay Street lawyer said. But others said yesterday’s announcement will help clear the air.

"Any sort of resolution to an issue like this is good, so from that perspective I suspect that would be beneficial," said James Dutkiewicz, an investment manager with YMG Capital Management Inc. in Toronto.

Glen Wright, whom the government named as chairman after the former board quit in June, said yesterday that the removal of Ms. Clitheroe will help stabilize the utility for the sale.

"Clearing up the issues around the leadership of the place and getting the place stabilized and organized will assist in the acquisition of a strategic partner," he said.

Adam Zimmerman, a Hydro One director and former chairman of Noranda Inc., agreed and added that the directors were unanimous that Ms. Clitheroe had to go.

"I don’t think anybody takes any joy out of it at all," he said. "This is a pretty shocking thing for her. It’s pretty tough to have to look at losing a job like that."

Mr. Wright said he would become co-CEO with Tom Parkinson, who runs the company’s maintenance and engineering services.

Mr. Wright, who has no experience operating a power company, said he will also remain Hydro One’s chairman. And he will keep his $250,000 a year job as chairman of another Ontario agency, the Workplace Safety and Insurance Board. Mr. Wright’s business background is in insurance and he is a political strategist for the Progressive Conservatives.

"I obviously have to rearrange a few things," he said. "I do have to now make a commitment to stay on somewhat longer until we have stabilized."

Mr. Parkinson has been at Hydro One less than a year. He earns $400,000 annually, Mr. Wright said, and he will not receive a pay raise for becoming co-CEO and chief operating officer.

Mr. Parkinson joined the company from Australia where he ran NorthPower, a government-owned utility in New South Wales that was merged into a group of private power companies last year. In 2000, he was criticized for taking a pay package of more than $500,000 while his company’s profits plunged by more than half. At the time, Mr. Parkinson was one of the highest-paid public servants in Australia.

Mr. Wright said he didn’t know how many other executives at Hydro One will agree to stay. Many were recruited by Ms. Clitheroe in preparation for the initial public offering. Sources say they remain loyal to her.

The new board was also ordered by the provincial government to roll back executive compensation and severance packages. Mr. Wright has said he wanted to have the new compensation packages in place by the end of this month.

"We have offered all four [senior executives] employment and we are asking them to stay with the organization. We are in discussion with them," he said yesterday.

Last night, Hydro One said Ken Hartwick, the company’s chief financial officer, has agreed to stay on. Mr. Hartwick received $633,346 last year in salary and bonus.