Hydro One: Case Study Questions

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Hydro One Case 1.a) How has being a local, regulated utility shaped the risk profile of Hydro One? The problem with being regulated made the company improve its performance and profile in multiple dimensions. The restrictions imposed on the company by various authorities in fact helped the company innovate and look deep into the functional aspects and also the risk aspect. For example the regulations forced the enterprise to reconsider its functioning. One of the major problems began with the Hydro One's rates being dictated by the Ontario Energy Board which capped the revenue to $4 billion. ("Enterprise Risk Management at Hydro One (A)", n. d.) This forced the company to find alternate methods of generating revenue which was required to continue maintenance and upgrade of its transmission system. ("Enterprise Risk Management at Hydro One (A)", n. d.) This constraint made the company begin thinking of cost cutting and attaining energy efficiency and management actions that resulted in the company being recognized by rating agencies. It also brought about some problems with the proposed decrease of benefits to new employees, whose union was opposed to the cost cutting measures. Secondly in keeping with the times, the government initiatives with regard to pollution and Hydro One had to implement these measures regardless of the fall in company's revenues. To offset this, the company had to create a viable demand management program. The principle behind this if examined
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