BC Hydro board shuffles CEO Bob Elton aside

By Scott Simpson
Vancouver Sun
November 4, 2009

Bob Elton is leaving his post as president and CEO of BC Hydro, the crown corporation announced on Wednesday. (Photograph by: Bruce Stotesbury, CNS files)

British Columbia’s biggest Crown utility is looking for a new leader, one with vision, political acumen and perhaps a ruthless streak that was lacking in the outgoing president and CEO.

BC Hydro chairman Dan Doyle announced on Wednesday that Bob Elton is being shuffled out of his role as president and chief executive officer after a six-year reign marked by civility and poise in the face of consistent pressure and controversy.

Elton is personally popular among Hydro employees and is likely to be missed, although Doyle said he is recommending him for a spot on the Crown corporation’s board of directors in addition to a special advisory role.

“He’s been a phenomenal guy for me to deal with since I’ve been here, but we are also looking to the future,” Doyle said in an interview. “We want to use Bob’s skill sets and also bring somebody else in who will run this ship to where we are going in the future.”

Elton’s departure marks the fourth and final turnover of senior leaders among the province’s two electricity utilities in less than one year.

Jane Peverett resigned as president and CEO of BC Transmission Corp. in January — just a few weeks after former federal Cabinet minister David Emerson took over as BCTC chairman. Peverett still has not been replaced.

Dan Doyle succeeded Mossadiq Umedaly as chairman of BC Hydro on July 16.

“We are looking everywhere for a suitable candidate — inside, outside,” Doyle said. “The one thing we have to look at here is not what we are doing today in Hydro, but what we can do for British Columbia.

“We also need to look and see if there’s not energy in British Columbia that could benefit this province if it was sold elsewhere.”

Elton’s first piece of advice to his successor may be to listen closely to what the government wants, even if there is evidence it is at odds with Hydro’s primary mandate to provide reliable electricity service to customers at the lowest possible cost.

Some of the biggest controversies during Elton’s tenure were a consequence of Hydro’s dual role as an essential public utility as well as a political tool of government.

For example, in 2005, Hydro forfeited $120 million of ratepayers’ money when it walked away from plans to build a natural gas pipeline and a gas-fired generating plant to boost electricity service reliability on Vancouver Island.

The gas project was initiated by the former NDP government and was ultimately quashed by the Liberals. But it was Hydro that bore the brunt of controversy for pressing ahead with a natural gas plant at a time when the world was increasingly preoccupied with the impact fossil fuels are having on climate change.

Nor did Hydro win itself any friends in government when it was revealed in mid-2008 that the Crown corporation had no plan to deal with massive gas industry growth that looms in northeast British Columbia.

The industry is the single largest contributor of resource royalty revenue to the province, and a shortage of electricity in the northeast would be a profound constraint on its growth — although an investment in the northeast in advance of gas sector growth would impose upon ratepayers an expense that Hydro traditionally would have sought to avoid.

Hydro was also the vessel for a Liberal plan to purchase electricity from Alcan at premium rates in order to facilitate a $2-billion modernization of the company’s aging aluminum smelter in Kitimat.

Hydro took the hit when the plan was rejected by the B.C. Utilities Commission as too rich for ratepayers. And even after a revised plan was approved, it was blocked by first nations still seeking redress from the provincial government for allowing their traditional territory to be flooded for development of Alcan’s Kemano generation station a half-century ago.

Given half a chance, Hydro was able to strike its own deals for redress with other first nations around the province, and Doyle noted Elton’s success in that endeavour in a letter to employees announcing Elton’s departure.

Most recently, and perhaps at the expense of Elton’s status as one of B.C.’s most highly paid civil servants, Hydro suffered a stunning setback when its monumental long-term electricity acquisition plan was rejected this past July by the B.C. Utilities Commission.

The province clearly wanted the aging Burrard thermal gas-fired generating facility off the books as a firm asset on Hydro’s roster of power plants, but Hydro instead chose to list it in a manner that diminished access to power sales contracts by independent power producers.

The independents, or IPPs, are a cornerstone of the Liberal’s energy plan.

Hydro’s reliance on Burrard, if only as a paper exercise, was a prudent reflection of a significant multi-year drop in electricity demand in B.C as a result of tumbling power demand by a depressed forest industry.

That tumble meant less IPP power would be required – and in terms of its primary mandate, less need for BC Hydro to contract IPPs to add more power to the grid.

But the Liberals want more IPP power on the grid, not less, to fuel an electricity export industry unparalled in B.C.’s 30-year history of power sales to the U.S.

They also want a green power expansion in the expectation that electricity consumption will escalate in response to climate change as an alternative to fossil fuel use.

Hydro’s fidelity to its mandate, however, was probably Elton’s undoing.

New Democratic Party energy critic John Horgan said Elton understands the electricity sector better than anyone in cabinet or in the civil service in Victoria.

“‘Just do it’ doesn’t work,” Horgan said. “The regulator is there for a reason.

“My sense is that Elton was providing too much opposition to the ‘just go and do it’ philosophy that the premier’s office and the political apparatus were putting in place.

“Governments operate on four year cycles and they want to get things done in a manner that fits the political time frame but a corporation the size and scale of BC Hydro just can’t operate that way.”

ssimpson@png.canwest.com

© Copyright (c) The Vancouver Sun

Source

BC Hydro CEO Bob Elton 'transitioning' to special adviser to utility's board

VANCOUVER, B.C. - The president of BC Hydro is being shifted out of the job because the Crown-owned utility is headed in a different direction, Hydro chairman Dan Doyle said Wednesday.

Chief executive Bob Elton will be replaced by Jan. 1 after a six-year stint, Doyle announced. An executive-search firm has been hired to find candidates inside and outside Hydro, he said.

Elton will be "transitioning" to a new role as special adviser to Hydro's board of directors - with a seat on the board, Doyle said - and executive chairman of Powertech Labs Inc., a subsidiary that does technology consulting.

In an interview, Doyle said Elton's departure has nothing to do with recent controversies over Hydro's role in the government's electric-power agenda.

"It was my idea," said Doyle, a highly regarded career bureaucrat appointed Hydro chairman last July.

Doyle said Elton was helpful to him settling in as chairman and knows the power business, which is why he'll stay on as an adviser.

"And yet I could see that we would be moving in a slightly different direction and would need different leadership," said Doyle.

"I think the direction that I want to move in is more about economic development in the province and making sure we take full advantage of that."

Under Elton, he said, Hydro is well positioned to fulfil the government's policy goals of electrical self-sufficiency by 2016, with reliance on clean sources such as run-of-river hydro and wind power.

Last summer, the B.C. Utilities Commission rejected Hydro's proposed future plans, which were based on the Liberal government's policy of leaning more on buying electricity from independent power producers that now have several projects in the works.

The commission said Hydro had over-estimated future B.C. power demands and that its plans should include continued use of the gas-fired Burrard Thermal plant near Vancouver.

The government last week directed Hydro and the commission not to include Burrard Thermal, except as an emergency source of power.

Doyle played down the stumble, saying Hydro got 90 per cent of what it asked the commission for, and the government had resolved the Burrard Thermal question with its directive.

"That was not part of my decision-making process," in replacing Elton, he said.

Energy Minister Blair Lekstrom said he played no part in shifting Elton, though he was consulted.

"I think as BC Hydro looks to the future they have found a need for Mr. Elton and his expertise," Lekstrom said.

"At the same time they obviously made a decision that (after) six years at the helm they wanted to move forward and look for a new CEO at this point."

But NDP energy critic John Horgan said he believes Elton was forced out of the top job for arguing the government's agenda to change the regulatory regime governing Hydro and create a new power export policy was not achievable in a two-month time frame.

"And they said, well, we'll find someone else to do it and that's why they're moving him out," he said.

Premier Gordon Campbell announced Monday he's creating a new cabinet committee on clean energy and climate change, with four task forces to deliver advice by the end of January on reforming the legislation governing Hydro, export policy, carbon pricing and trading and project development.

Horgan also questioned why Elton to go simply because Hydro was changing its focus.

"Hydro always has been an economic-development driver," he said.

"To suggest that Mr. Elton was unfamiliar with that and needed to be removed to find someone who understood that is a stretch.

"My sense is the new direction that Dan Doyle's talking about is a new political direction, not a new direction for the corporation per se."

©The Canadian Press, 2009

This looks like a sideways move

"Bob will be transitioning to a new role as special adviser to the BC Hydro board and executive chair of Power Tech," was the quote from board chairman Dan Doyle, himself a recent arrival. "His knowledge and experience will continue to be an asset to the company in the months ahead."

Still, it looked like a sideways shuffle undertaken to save face and severance. The B.C. Liberals appointed Doyle last July, amid rumours that they wanted the new board chair to preside over change in the executive suite. This, surely, was confirmation of their intentions.

"I wanted Bob here," was all Doyle would say when I asked if nice guy Elton was being kept around to save a big severance payout. He'd been averaging more than $500,000 a year in pay, bonuses and other compensation.

Doyle did confirm that the move would clear the way for "a change of direction." As to the nature of that shift, he dropped a couple of clues.

Hydro needs to be more mindful of Premier Gordon Campbell's goal of making B.C. self-sufficient in the production of electricity by 2016, the board chair suggested. What about the premier's drive for green power? "Wrong to say that Hydro doesn't get green power," Doyle replied, citing the successful Power Smart program for energy conservation. But he agreed that the company could be criticized for the "pace" of its efforts to encourage the generation of more power from greener sources.

What about building power for export? "I think we should," Doyle told me, but he added that the call would be up to the government and its newly appointed advisory task force on green energy.

Beyond Doyle's guarded remarks, there was last week's more obvious hint from the premier and his ministers. The B.C. Liberals have been concerned that investors were losing confidence in the province as a place to develop power projects, particularly since a recent ruling by the BC Utilities Commission that blocked Hydro's last call for proposals from private operators.

So last week the cabinet eliminated that regulatory obstacle, ensuring that even as BC Hydro invests billions in upgrading its publicly owned assets, it will also be buying power on contract from private operators.

The action was cheered by independent power producers. "There's been a certain degree of investor fatigue with B.C. because of an uncertain investment climate," said the CEO of one of the largest producers, Donald McInnes of Plutonic Power, in an interview with the Dow-Jones news service this week.

"The premier is working very diligently to restore that investor confidence," he told reporter Brian Truscott.

McInnes noted that the government had tried to nurture the sector through earlier means -- a special directive to the utilities commission, other policies aimed at BC Hydro. "Subtle policy direction obviously hasn't worked," he added.

Nothing subtle about the latest actions. The cabinet rejected the utilities commission's preference for continued reliance on the natural-gas-fired Burrard Thermal plant. The plant is officially declared a relic, available only for emergency backup purposes. Hydro is thus freed to seek out private operators to develop the equivalent amount of replacement power via wind farms, run-of-the-river generating stations, and other sources of greenhouse-gas-emissions-free electricity. Nor should there be any doubt that the house-cleaning at the top is also intended to speed up the drive for more generating capacity, probably including power for export.

In fairness to Elton, he had to steer the company through an era of mixed messages. A cabinet that four years ago demanded an energy plan, then ordered it scrapped just 48 hours before it was to be released. A premier who went from being a climate-change skeptic to one of the leading advocates of climate action in the space of two years.

A government that was on fast forward so long as the premier was focused. Then constipated as soon as his attention was diverted elsewhere.

The news about Elton sparked a round of mainly groundless speculation about successors. Deputy energy minister Greg Reimer. Jessica McDonald, the premier's recently departed deputy. Vanoc boss John Furlong. Deputy finance minister Graham Whitmarsh.

Doyle, for his part, has hired a head-hunting firm and launched it on what he insists will be "a real hunt" for the CEO.

What's he looking for? "Huge intellect. Leadership. Presence. Ability to deal with stakeholders." Others would say the next Hydro chief needs a thorough grasp of the much-changing energy industry. Plus the know-how to preside over what looks to be the biggest expansion in generating capacity (in-house and on-contract) since the 1970s.

But if Elton were talking, he might say his successor will most of all need the ability to distinguish signal from noise, particularly in the messages coming from the political masters in Victoria.

vpalmer@shawlink.ca

© Copyright (c) The Vancouver Sun

Source