1. Future Efficiencies in The Electricity Distribution Sector presented by Don MacKinnon, President February 17, 2004

2. Power Workers’ Union Represents 17,000 members Generation Transmission Distribution Market Operator

3. Presentation Overview Industry Certainty Stability Service quality and reliability

4. Industry Certainty Lack of consolidation activity with current opportunity for tax-exempt transfer of assets reflects lack of certainty Government interference in a commercial entity’s ability to realize a market-based Rate of Return (ROR) minimizes incentive for voluntary consolidation that occurs because a distributor can be confident of reaping the benefit of any resulting increase in efficiency

5. Industry Certainty Distributors as Commercial Entities Uncertainty devalues investment value of distributors Conditions that contribute to uncertainty: Requirement for Minister’s approval for distribution rate review by OEB Proposal on using distributors’ third installment towards a market based rate of return to fund Demand Side Management

6. Industry Certainty Industry uncertainty impacts distributor’s decisions on investment in its system, operations and workforce Efficiency improvements through technical innovation require upfront capital investment Efficiency improvements of workforce requires ongoing training – a significant investment Investment in System and Workforce

7. Industry Certainty Industry certainty is required to provide a healthy work environment for workforce that results in efficiency enhancement Uncertainty creates stressful work environment and low workforce morale that is not conducive to efficiency improvements

8. Industry Certainty Confirm commercial status and give commitment to treat distributors as commercial entities or Introduce legislation establishing distributors as non- commercial, non-profit entities Clear declaration of distributors’ status

9. Stability Healthy electricity industry requires skilled workforce Industry restructuring must ensure stability for workforce Requires smooth transition Uncertainty among workers impacts efficiency

10. Stability The Electricity Conservation and Supply Task Force (ECSTF) identifies the importance of addressing the need for skilled workers as the electricity industry goes through a major demographic shift.

11. Stability Service territory issues Efficiency initiatives through voluntary, commercial arrangements Voluntary consolidation

12. Service Quality and Reliability Need to invest, not only in system, but equally in skilled workforce Cutting training to cut costs results in inefficiency and deterioration of service quality and reliability Uphold Board’s objective “To protect the interests of consumers with respect to prices and the reliability and quality of electricity service”

13. Service Quality and Reliability Centrally coordinated training program Central manpower system for recruitment

14. Summary The Government needs to clarify distributor status as commercial entity or non-profit Stability for the highly skilled distribution workforce is essential to realize efficiency and maintain service quality and requires smooth transition Continued investment in training and hiring of workforce essential to maintain service quality and reliability The PWU will continue to ensure effective membership representation through all means available