Hydro Ottawa expects financial shortfall from May 21 storm without provincial help

A traffic light and segment of a utility pole are seen in the intersection of Viewmount Drive and Merivale Road after a major storm took down power lines and utility poles, blocking in multiple vehicles, on Merivale Road in Ottawa, on Saturday, May 21, 2022. (Justin Tang/THE CANADIAN PRESS)

Hydro Ottawa is warning city council that its annual dividend to the city could be more than $3 million smaller because of the devastating impacts of the May 21 derecho.

The powerful windstorm damaged hundreds of hydro poles in Ottawa and knocked out power to half of the local grid. It took a week to get most customers reconnected and several more weeks before power would be fully restored. Ten people were killed as the power storm swept across Ontario and Quebec. The Insurance Board of Canada ranked it as the sixth most expensive natural disaster in Canadian history.

In a letter to city councillors and the mayor, Hydro Ottawa president and CEO Bryce Conrad said the storm cost the utility $23.8 million, including $15.1 million in capital expenditures and $8.7 million in operating and maintenance costs. Hydro Ottawa also lost $6 million in revenue. Conrad had previously estimated the storm could have cost as much as $30 million.

“Without any provincial relief, it is anticipated that the financial impact to our shareholder will be a reduction in the annual dividend of approximately $3.6 million,” Conrad wrote in the letter, dated Nov. 11.

The city of Ottawa is Hydro Ottawa’s sole shareholder. Every year, the utility pays the city 60 per cent of its annual income or $14 million, whichever is greater. In 2021, Hydro Ottawa’s dividend payment to the city was $23.7 million.

The city has requested provincial disaster funding to cover costs incurred by the powerful and deadly storm. Council made a request in June and again in September.

The derecho is also one of the factors city staff say are contributing to a projected year-end deficit.

The city was still awaiting a response from the province about financial support as of Oct. 31. Outgoing Ottawa mayor Jim Watson said Premier Doug Ford assured him the province would pay for cleaning up after the storm.

However, a spokesperson for the Ministry of Municipal Affairs and Housing said in September that a disaster assessment found that most damage in Ottawa was insured or was tree damage that is ineligible under the provincial disaster assistance program.

The new city council will be sworn in Tuesday.

Hydro Ottawa, meanwhile, says it is working to evaluate its response to the storm and the lessons learned.

“With an expected increase in more frequent and extreme weather events as a result of climate change, the company is integrating learnings and focusing efforts on both the grid and our emergency response plans to ensure scalability across our people, process and technology,” Conrad wrote.

A full report from Hydro Ottawa on the impact of the storm will be released in the coming days, a spokesperson says.