Statement from Jennifer Williams, CEO, Newfoundland and Labrador Hydro responding to the Auditor General Report of Nalcor Energy Operations from 2013-2018

Earlier today, the Office of the Auditor General (AG) released the Compensation section of its audit report of Nalcor Energy as well as the associated recommendation. This section was the fourth and final section of the audit scope completed for the years 2013 to 2018. Hydro has previously responded to the first three sections of this audit scope (here).

While the report reads as though it is present day, the audit period covered 2013-2018. As such, many of the observations are no longer reflective of the current compensation or organizational structure at Hydro.

There have been a number of significant compensation policy and structure changes implemented since 2018, the end date of the audit period.  This is outlined in the subsequent events section of the AG report. Some of the more material adjustments since 2018 include but are not limited to:

• Reduction of executive positions by 50%: There have been significant organizational structure changes to ensure a more efficient and streamlined operation since the transition of Nalcor under Newfoundland and Labrador Hydro in 2021. In the past year, the number of Executive positions has been reduced by 50% from 18 to 9 – resulting in significant savings. This included the merging of the President and CEO role for Nalcor and the President role for Hydro into one combined position at a materially reduced salary. Similarly, a number of other management positions have been combined, with team members taking on additional accountability.
• Adjustments to compensation: In addition to the removal of “Executive Vice President” and “Senior Vice President” level positions, executive compensation has been adjusted, including elimination of executive vehicle allowances and performance bonuses for all senior level employees.
• Salary Scale Changes: Non-union salary scales were revised in 2018 to better reflect the local and Atlantic Canada utility industry market.
• No general increases to salary scales for 7 Years: Non-union employees have not received any general economic increases to scales since 2015.
• Cost Reduction measures: Hydro has eliminated redundancies, reduced travel costs, and other miscellaneous spending.

Based on the changes since the end of the audit period, several of the positions outlined in the salary comparison tables within the AG report no longer exist or have substantially changed in Hydro’s current structure. It should also be noted that positions referenced in the report relating to oil and gas have transitioned to Oil Co. in 2019, and no longer exist within Hydro’s structure.

As a crown-owned utility, Hydro has a legislated mandate to deliver reliable electricity to the province. In doing so, we must make responsible, utility-based decisions to ensure we are responsive to the needs of the public and the ever changing energy industry. Our decisions are subject to scrutiny as a large portion of Hydro’s operation is subject to the Board of Commissioners of Public Utilities (PUB) oversight. Therefore, Hydro’s costs, including compensation, are examined in detail by several intervenors, including utility experts, on a regular basis to ensure Hydro conforms to good utility practice. We are committed to meeting our legislated mandate while also balancing fiscal responsibility. Simultaneously, we are also planning for a decarbonized future that involves the provision of increasing amounts of clean electricity. To ensure we have the necessary skills and talent to effectively meet these needs, we benchmark and compete with the local and Atlantic utility industry which includes another Crown utility, which offer similar employee benefits including sick leave or short-term disability programs, pensions or RRSP contributions.

Hydro is committed to fiscal responsibility while also ensuring we remain competitive within the utility market in order to mitigate employee attraction and retention risks, while not compromising safety or reliability in the delivery of reliable, cost-conscious electricity to the province. Through a combination of reducing executive and full-time positions, eliminating redundancies, and implementing other cost cutting measures, Hydro has reduced its operating costs by approximately $19 million. We are working hard to find the right balance for our business. We know the people of the province are counting on us to do that.

I recognize the time and effort that it has taken to complete this audit, and I thank all of those involved at both the Office of the Auditor General and at Hydro.

Jennifer Williams
President & CEO, Newfoundland and Labrador Hydro