Hydro One Ltd., one of Canada’s largest power utilities, is searching for a new chief executive officer for the second time in four years after the current leader told the board he was leaving for another company.
Mark Poweska, Hydro One’s current chief executive, was hired by the Ontario electricity distributor in early 2019, but is leaving after three years for a “leadership position at a utility closer to his family in Western Canada later this year,” Hydro One H-T announced early Tuesday.
Calgary-based power utility Enmax Corp. announced that Mr. Poweska will become its new chief executive beginning in late September.
Mr. Poweska, who is 52, joined Hydro One from a leadership position at BC Hydro, where he had worked for 25 years. His departure from the Ontario utility seems to have caught Hydro One’s board by surprise because it is only now starting a search to replace him. Board director Bill Sheffield will serve as interim president and chief executive while the search is conducted.
Hydro One’s stock was little changed in trading on Tuesday, closing at $32.72.
Tuesday’s announcement extends the turmoil that has engulfed Hydro One during its short history as a public company. The utility used to be owned by the Ontario government, but was privatized in 2015 by the provincial Liberals. At the time, the decision was politically controversial because electricity prices in the province were rising and some voters mistakenly believed the two events were connected.
Since then, Hydro One’s leadership has been particularly tumultuous. The chief executive hired to run the utility as a public company, Mayo Schmidt, also lasted three years after he was directly targeted by then Progressive Conservative Leader Doug Ford during the 2018 provincial election campaign. At the time, Mr. Ford criticized the hiring, referring to Mr. Schmidt as a “six-million-dollar man” because of a $6.2-million compensation package.
The Ontario government is Hydro One’s largest shareholder and Mr. Ford’s suggestion was that, as premier, he would not stand for taxpayer waste. In July, 2018, a month after Mr. Ford was elected, Mr. Schmidt stepped down and Hydro One’s board of directors resigned en masse.
Because of the political interference, the search to hire a replacement was an arduous one and landing on Mr. Poweska took eight months. The process was complicated by legislation the PC government introduced to cap Hydro One’s chief executive pay at $1.5-million.
Mr. Ford’s interference also cost Hydro One an acquisition. During Mr. Schmidt’s tenure, the utility bid $4.4-billion for Avista Corp., which is based in Washington state, as part of an expansion strategy to turn Hydro One into a North American player. However, the state regulator ultimately rejected the deal, throwing the growth strategy into disarray.
In its decision, the regulator said: “It became clear on and after July 11, 2018, [when the CEO and board left] that Hydro One’s directors cannot be considered independent and the province’s role is not limited to that of a minority shareholder in a publicly traded corporation.”
The deal’s cancellation put Hydro One on the hook for a US$103-million termination fee to Avista, and Hydro One had also already spent tens of millions of dollars on legal and banking fees for the deal.
The chaos stemming from the government interference weighed on Hydro One’s shares and the utility’s stock fell to roughly $19 by late 2018, down from $20.50 during its initial public offering in 2015. However, interest rates were also rising in 2018, and higher rates tend to hurt high-yielding stocks such as utilities.
During Mr. Poweska’s tenure, Hydro One threw out the utility’s expansion strategy and focused on its home province. The new strategy has paid off and Hydro One’s share price has climbed 57 per cent since the day Mr. Poweska was named chief executive. The stock also recently set a record high.
However, Canadian publicly-traded rivals Emera Inc. and Fortis Inc. have traded in very similar fashions, and both companies also set record highs this spring.
Mr. Poweska made $1.59-million in total compensation last year, while Scott Balfour, the chief executive of Emera, made $8.3-million. David Hutchens, the chief executive of Fortis, made $9.1-million.
Mr. Schmidt, Hydro One’s former chief executive, was appointed to the same position at Canada’s Nutrien Ltd., an agriculture giant, in 2019, but exited the company this past January after only eight months. Nutrien cut ties with Mr. Schmidt after a culture clash over his imperious leadership style, among other factors, The Globe and Mail has reported.
With files from Andrew Willis, Niall McGee and Jeffrey Jones
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