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Politics Ontario auditor’s report to take aim at power utility’s plum pensions

Ontario Auditor-General Bonnie Lysyk is shown on Oct. 8, 2013.

MOE DOIRON/THE GLOBE AND MAIL

Employees at the province's biggest power utility receive pensions that are unusually generous by public-sector standards, Ontario's Auditor-General is set to reveal as part of a critical look at how the Crown corporation conducts business.

The government on Monday tried to get out ahead of the audit, announcing it had called in pension expert Jim Leech to reform the system.

Sources told The Globe and Mail that auditor Bonnie Lysyk's annual report, to be released on Tuesday, will show that at least some Ontario Power Generation employees pay significantly less into their pensions than the agency does – sticking ratepayers with a large portion of the tab.

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The report is also expected to take aim at OPG's overtime policies and its employees' use of expense accounts, as well as its hiring practices.

The Attorney-General's office confirmed that Ms. Lysyk has looked at OPG's labour costs, as well as whether its human-resources policies were above board and "in accordance with … sound business practices."

The audit will be the latest bad news for the province's energy sector. In the past two years, the Ontario government has been under siege for the costly cancellations of two gas-fired power plants and a series of expensive wind and solar power deals.

OPG spokesman Neal Kelly confirmed that employees' pensions are mostly funded by ratepayers, but did not answer any of The Globe's other questions.

The province unexpectedly announced Monday it will reform pensions at OPG and other government-run electricity agencies, and cap the salaries of top provincial civil servants. But it provided few specifics on what exactly it will do.

Finance Minister Charles Sousa said Mr. Leech, who leaves his post as the head of the Ontario Teachers' Pension Plan this month, will figure out how to make electricity-sector pensions less expensive for the public purse. He will recommend changes at OPG, Hydro One, the Independent Electricity System Operator and the Electrical Safety Authority.

Mr. Leech will look at how much employees are paying into their pension and figure out how to make the benefits more flexible, Mr. Sousa said. He will also consider ways of pooling the different pension funds together.

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"The intent, of course, is to try to ensure that we have a system that's affordable and sustainable," Mr. Sousa said at Queen's Park Monday.

The government is concerned about the high percentage of OPG pension costs borne by taxpayers, he said, adding Mr. Leech will "be preparing some recommendations on joint sponsorship, equal pay and looking at our benefits plan."

The province will also try to rein in the pay and benefits of public-sector executives, including the heads of hospitals, top university officials, school-board administrators and electrical-company executives, Government Services Minister John Milloy said.

The government will table legislation this winter giving itself the power to impose caps, after which Mr. Milloy will figure out what those caps will be. He said the caps will vary by sector and the size of the organization. They will affect not only salaries, but also severance packages and other perks.

Mr. Milloy denied he was only announcing the caps Monday to ward off the auditor's criticism.

"We've always spoken about the fact that salaries and wages are a major part of the government's budget," he said, pointing to wage freezes in some government agencies. "Over the past number of years, we've taken a number of steps to curb that."

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The opposition parties criticized the government for offering no specifics on its plans.

"This government, like we've seen from them in the past, need to appear as if they're doing something," Progressive Conservative finance critic Vic Fedeli said. "They've had 10 years to address this issue. Now they're announcing they're going to take another six months."

"They've been saying they're going to do this for two years … it's a promise for accountability and I think people are running out of patience," added New Democratic MPP Catherine Fife.

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