Manitoba Hydro announces new corporate structure and executive leadership changes
February 3, 2017
Move reduces executive team by 30 per cent
Manitoba Hydro today announced a corporate restructuring of the utility and changes to its executive leadership. These moves will both improve operational efficiencies and align with the corporation’s goal of strengthening its financial position. As part of the restructure, the company is reducing the size of its executive team by 30 per cent, effective today.
“Today’s announcement marks the first step in a process of significant transformation for Manitoba Hydro with changes in our executive leadership team and the realignment of our organizational structure,” said Manitoba Hydro President and CEO, Kelvin Shepherd. “These changes are a necessary first step towards achieving cost reductions within Manitoba Hydro and positioning us to execute on our strategic priorities that we have identified as core to Hydro’s success. As a result, three members of Hydro’s Vice President team will be leaving the company.”
In the coming weeks, Manitoba Hydro will undertake a broader review and restructuring of its middle management levels. This will be followed by further streamlining of Hydro’s province-wide workforce by approximately 900 positions. As an initial step, the utility intends to offer employees a Voluntary Departure Plan, commencing later this spring, in order to help facilitate the necessary reductions.
Manitoba Hydro recently negotiated new four-year collective agreements with Unifor, the Association of Manitoba Hydro Staff and Supervisory Employees (AMHSSE) and the Canadian Union of Public Employees (CUPE).
“These agreements, which provide for general wage increase restraints including zero per cent in 2017, combined with ongoing reviews of operating and capital expenditures, are all significant steps towards improving the financial stability of Manitoba Hydro,” said Shepherd.
Prior to making the changes public, Shepherd communicated directly to staff his confidence that the employees of Manitoba Hydro are up to the task of managing this period of transition, citing the highly skilled, dedicated and talented employees throughout the organization.
“In the same way we pull together to restore service to our customers during a storm or other system emergency, I am absolutely confident that we will pull together as we move forward with our strategy to make Manitoba Hydro a stronger, financially stable, customer-focused organization creating value for Manitobans.”
Statement from the Manitoba Hydro-Electric Board
As Chair of the Manitoba Hydro-Electric Board (MHEB), Sanford Riley is releasing the following statement on behalf of the MHEB.
- In September 2016, we provided our assessment of the financial position of Manitoba Hydro. Specifically, we identified the risks associated with undertaking an overly aggressive capital program without sufficient equity, and the likelihood that Manitoba Hydro would - in turn - seriously degrade the credit of the Province of Manitoba.
- We recognize that the decision to reduce the ranks of Manitoba Hydro by 900 people will be very painful for those who are affected and we regret this. However, we believe that this is an absolutely necessary first step in the process to revitalize the financial position of Manitoba Hydro and to protect the financial integrity of Manitoba.
- We appreciate the leadership being shown by Manitoba Hydro management and employees in addressing what, essentially, is a problem not of their own making.
- On their own, these reductions will not be nearly enough to restore Manitoba Hydro’s financial position. Even with these reductions, double digit annual rate increases would be required for at least five years in order to re-establish Manitoba Hydro on a proper financial footing.
- Even though Manitoba Hydro has, and will - even with further rate increases - continue to have among the lowest electricity rates in North America, we do not believe that the entire burden of restoring Manitoba Hydro’s finances should be borne by customers and employees.
- We believe that a balanced approach in which the government - the owner of Manitoba Hydro - invests equity into Manitoba Hydro, will allow the utility to moderate rate increases to more manageable levels. The combination of cost reductions at Hydro, equity support from the province, and rate increases will facilitate the revitalization of Hydro’s finances in a way that distributes the restructuring impacts between each group that has a stake in Manitoba Hydro and - in time - returns a fiscal dividend to all Manitobans.
- We are in the process of developing a detailed plan which covers all of those matters, which we anticipate will be included in due course as part of a general rate submission to the Public Utilities Board.
- We feel it is very important for Manitobans to understand that the restructuring announced today at Manitoba Hydro is not sufficient to restore the corporation’s finances. Further significant corrective steps are required. We believe that if we fully address the situation now, we can restore Manitoba Hydro to financial health with manageable impacts on Hydro, its customers and taxpayers. This, in turn, will restore Manitoba Hydro to our provincial “crown jewel” and allow it to continue to play a key strategic role for Manitoba in a world in which renewable energy is, increasingly, a huge competitive advantage.
For more information on this MHEB Statement, please call Scott Powell at Manitoba Hydro who will arrange contact with Sanford Riley.