Waterloo North Hydro Inc.

2020 Annual Report

Contents

*Some of the images included in this Annual Report were taken prior to the implementation of COVID-19 pandemic restrictions.

About Waterloo North Hydro

We serve over 58,000 customers across a large urban and rural service area spanning 683 square kilometres, encompassing the City of Waterloo, the Township of Wellesley, and the Township of Woolwich.

Who Are We?

Waterloo North Hydro Inc. is a municipally-owned electricity distribution company incorporated under the Business Corporation Act (Ontario) on May 1, 2000.

Purpose: Deliver electricity efficiently to our customers.

Mission: To be of service to our customers by delivering electricity to homes and businesses in our community – safely, reliably, 24/7.

Vision: Be the flexible, sustainable distribution platform for connecting consumers and producers of electricity, and be the trusted energy advisor of choice for our customers.

Core Values: Respect, Commitment to Excellence, Service, Teamwork and Collaboration, Responsibility and Accountability, Safety and Environmental Stewardship.

Corporate Ownership

WNH is a wholly-owned subsidiary of Waterloo North Hydro Holding Corporation, which is owned by the City of Waterloo, the Township of Wellesley, and the Township of Woolwich.

Message to Shareholders

Providing exceptional service in the face of adversity.

The first two months of 2020 were typical and then we experienced a year like no other for WNH. We faced much uncertainty from constant changes and announcements as the COVID-19 pandemic unfolded in Ontario and the Waterloo Region.

This unchartered territory had us worried about the safety of our employees, their families, and our customers as we navigated through the adversity of the pandemic in 2020. Even though the COVID-19 pandemic has had a significant impact on the Region of Waterloo, the employees of WNH remained committed to providing a high level of service to our customers throughout 2020.

Our exceptional service to customers starts with the distribution system at WNH. As we continue advancements in rebuilding aging assets coupled with new technologies, we lowered both the frequency and severity of customer outages. WNH customers saw a 38% decrease in customer minutes of interruption in 2020. With so many customers staying at home during the pandemic, reliable electricity was essential.

Providing support to customers is always part of our service at WNH. Like many businesses, we modified our customer service counter with Lexan screens and changed our front entrance foyer to keep customers and employees safe. WNH kept up with the stream of regulatory directives, implementing five separate rate adjustments in 2020, as well as customer choice between the time-of-use pricing in place for more than a decade, and reintroducing tiered pricing that has not been used since prior to 2010. We now do more business electronically with over 40% of our customers using paperless bills and WNH saw an increase in preauthorized payments in 2020.

WNH completed two years of hard work with the approval of the Cost of Service (COS) Rate Application by the OEB in late 2020. After several customer engagements and several thousand pages of evidence, we were pleased to have our rate submission accepted with only a few changes. Of the twelve LDCs that were scheduled to submit a COS application in 2020, WNH was the only LDC to complete the process, including receiving approval for rates, in 2020.

WNH received recognition for all its hard work in 2020. In a national survey that included randomly selected WNH customers, 96% of the survey respondents were satisfied with the service provided. WNH ranked above national and provincial levels in customer satisfaction, reliability, and performance metrics.

WNH was awarded Gold in Canada’s Select Employer Awards in the Safest Utilities and Electrical Employers category, and Excellence in the category of Best Wellness and Psychological Safety. For the fifth consecutive year, WNH was recognized as one of Waterloo Area’s Top Employers.

Despite the decrease in revenue from the impact of the pandemic, WNH continued its strong financial performance with returns to the shareholders. The company continues to invest in new and upgraded infrastructure to the benefit of our customers, our shareholders, and our communities.

We want to acknowledge the support of the Board of Directors, and thank the employees for all their efforts, especially in 2020, to make WNH an award winning company that our customers trust and rely upon.

Micheal Kelly, Chair of the Board
Waterloo North Hydro Inc.

Rene W. Gatien, President & CEO
Waterloo North Hydro Inc.

Adjusting to a New Normal

The COVID-19 pandemic had a major impact on Waterloo Region, however, WNH remained committed to providing exceptional service to its customers throughout.

To keep staff, the public and their families safe, WNH implemented several safety measures that remained in place through 2020. In addition to many employees working remotely for long stretches of the year, the office was closed to customers in the late spring. When the office reopened, Lexan barriers were installed at the front counter, and signage was added to the door and the floors to promote physical distancing. WNH also put a limit on the number of customers allowed in the building at one time.

WNH’s health and safety group worked tirelessly to ensure employees remained safe throughout the year. A Pandemic Planning Committee (PPC) was formed, which met regularly and guided the organization’s pandemic decision-making. Employees were provided with masks to wear, both in the office and outside of work. WNH increased its building sanitizing efforts, and added hand sanitizer and hydrogen peroxide to help keep staff healthy throughout the year.

Ongoing communication and employee education were important components of WNH’s pandemic response. The PPC and the Executive Team provided regular updates to employees. Numerous work instructions and employee education documents were shared with employees to help keep them up-to-date.

Cost of Service RATE APPLICATION

Waterloo North Hydro saw the completion of two years of hard work with the approval of its Cost of Service Rate Application in 2020 for rates effective January 1, 2021.

WNH wanted to ensure its application reflected the needs of its customers and included the results of two customer surveys and input from large business customers in its rate filing.

Work on the application began early in 2019, and WNH submitted the final application on June 30, 2020. The submitted application contained just under 2,900 pages of evidence, with another 1,400 pages generated to answer questions from the Ontario Energy Board (OEB) staff and intervenors

Once the application was submitted, customers were invited to comment on the application during the approval process. Six intervenors and the OEB staff asked 600 questions based on the application.

In October, WNH met with OEB staff and intervenors for a rate hearing, and achieved a settlement agreement that was approved by the OEB.

The settlement reduced Capital Investment levels by $550,000 and annual Operating, Maintenance & Administration expense levels by approximately $725,000.

WNH was the only Local Distribution Company in Ontario to complete an application and receive a rate order in 2020

600 questions from OEB staff and intervenors, answered in just three weeks

Approximately 4,300 pages of evidence provided as part of the rate filing

Reliability AND SYSTEM IMPROVEMENTS

With more customers working from home, and staying home in 2020, reliable electricity was more important than ever. Waterloo North Hydro’s commitment to deliver electricity was apparent as crews, and control room staff worked through the year to keep power on to customers across WNH’s service territory.

466

streetlight repairs completed in 2020

100%

of WNH meters sample tested through Measurement Canada’s Reverification Program were reverified.

WNH continued to complete scheduled system upgrades across its service territory to improve the reliability of its distribution system and upgrade equipment. The utility minimized the impact of planned interruptions on its customers by shifting portions of its work to less populated areas, and scheduling outages during less impactful times. This strategy allowed WNH to complete a similar amount of planned interruptions in 2020 while affecting significantly less customers.

System improvements coupled with the ongoing use of the Advanced Distribution Management System (ADMS) and Fault Location Isolation and Service Restoration (FLISR) technology continued to help lower both the frequency and severity of unplanned customer outages.

WNH saw a 38 per cent decrease in Customer Minutes of Interruption in 2020. This decrease resulted in more than 2.13-million customer minutes of interruption saved.

The most significant outage event in 2020 was caused by an August motor vehicle collision in Waterloo. The collision resulted in a severed hydro pole and WNH was required to de-energize several feeders to ensure the collision scene was safe for emergency first responders. In total, 4,673 customers were impacted by the outage, which resulted in 572,367 minutes of interruption.

The utility continues to improve automation across its service territory. Currently, some form of automation through FLISR and the ADMS covers more than 95 per cent of customers. WNH intends to have 100 per cent of its 13.8 kV and 27.6 kV feeders FLISR enabled by the end of 2023.

Average Outage duration for WNH Customers (Hrs)

Customer Support

Providing value to our customers through positive service experiences is a hallmark of Waterloo North Hydro. In 2020, the impacts of COVID-19 made customer support more paramount than ever before.

WNH’s Customer Support team kept busy in 2020, as the utility implemented five separate Regulated Price Plan (RPP) rate changes. Additionally, the OEB introduced Customer Choice Electricity Pricing in November, allowing customers the option to choose between Time-of-Use and Tiered Pricing for their electricity billing.

The organization continued its focus on providing value through online tools, as the number of customers registered for paperless billing increased by more than five per cent to 40.5 per cent. WNH also saw an increase in the number of customers registered for My Account, and Pre-Authorized Payment.

Although provincial regulations limited in-person office visits, WNH continued to serve its customers throughout the year. Customer support staff handled 25,520 customer calls and once again surpassed the Ontario Energy Board’s Service Quality Indicators for 2020.

708,698

bills issued

99.97%

accurate bills

98.65%

of potential disconnections were resolved by Customer Support staff following the end of the disconnect moratorium in July

New Residential Services Connected On -Time

Scheduled Appointments Met On-Time

Underground Cable Locates

Customer Satisfaction Survey

Every two years Waterloo North Hydro surveys its customers to get an understanding of their satisfaction with our customer service and operations efforts. The survey also helps to inform our future direction as we get a better understanding of the shifting needs of those in the communities we serve.

The survey examined customer satisfaction levels, reliability, communication with customers, billing and account concerns, and other aspects of the services WNH provides.

The 2020 survey also included a focus on the impacts of COVID-19, and how customers felt the utility handled the first wave of the pandemic.

WNH ranked above the national and provincial levels in customer satisfaction, reliability, and other core operational areas.

Overall Customer
Satisfaction

96% of survey respondents said they were satisfied with the service provided by WNH. This is above the provincial average of 93%.

COVID Preparedness and Safety

76% of respondents have a high level of trust in WNH’s ability to handle another COVID-19 outbreak. This surpasses the provincial average of 69% .

Performance During
COVID-19

95% of customers were satisfied with WNH’s overall performance during the COVID-19 pandemic. This is greater than the provincial average of 94%.

Respected in the
Community

92% of respondents said WNH is respected in the communities we serve. WNH surpassed the provincial average of 86%.

Confidence to Deliver
Electricity

97% of respondents are confident about the ability of Waterloo North Hydro to meet their obligation to deliver electricity efficiently and safely. This is above the provincial average of 96%.

Handling of Outages and Restoring Power Quickly

91% of customers are confident in WNH’s ability to handle outages and quickly restore power. This is above the provincial average of 90%.

Safety

The safety, health, and well-being of our employees, the customers we serve, and the public is our main priority. WNH is committed to safety education, training, and awareness throughout the year.

In 2020, a portion of WNH’s regular safety training shifted from in-person education to a virtual setting. Employees continued to receive industry-leading education, with almost 5,000 hours of training provided across the organization on subjects that included, driver training, emergency first aid, and respect in the workplace training. Employees also attended monthly Health and Safety meetings, both in-person and online. In 2020, employees returning to work following maternity leave or other absences received a COVID-19 orientation to review health restrictions and workplace policy put in place since the outbreak of the pandemic. The utility circulated important safety tips and distributed safety posters, and news items throughout the year to help keep employees and visitors up-to-date on important safety information. The continued focus on safety education is apparent as WNH recorded its seventh consecutive year with zero lost-time injuries.

Safety is not limited to physical health. WNH places the mental health of its employees at the forefront. In addition to its award-winning wellness program, the organization provides mental health training, as well as training to help employees cope with stress. For more information, see the Employee Wellness section. The focus on mental health programs helped WNH earn recognition from Canada’s Safest Employers with the Excellence Award in the category of Best Wellness and Psychological Safety Program.

TRAINING offered to employees:

Driver Awareness
Emergency First Aid
Respect in the Workplace
Joint Health and Safety Committee Certification
LRT Safety Awareness
Rescue Practice

Seven consecutive years with zero lost-time injuries

4,982 hours of safety training completed in 2020

12,633 locate requests received

Safety Education

Waterloo North Hydro’s third annual Elementary School Poster Contest had a slightly different look in 2020, and it proved to be more popular than ever with a record 65 entries from more than 30 different schools across Waterloo Region’s Public and Catholic School Boards.

As students across the region adjusted to online learning, WNH shifted from promoting the contest through teachers and principals, to targeting parents through social media and helping to provide a fun, educational activity for students to do outside of their regular classroom activities.

The theme of this year’s contest was “what to do when you see a downed powerline.” Students in Grade 1-8 learned key safety lessons from “Lucky” the Squirrel and used what they learned to design safety posters for use in bill inserts, social media messaging, and on the WNH website.

Five finalists in three age groups were chosen through an internal vote. Winners were then selected through a public online vote, which saw more than 261 votes cast before the judging period ended, the highest number of votes ever received.

The contest winners were presented with a special prize and photographed with their winning artwork.

Elementary School Safety Program

Waterloo North Hydro’s award-winning School Safety Program is a highlight of the school year for many area students. ‘Lectric Larry, a retired WNH employee leads classes through a fun, interactive safety presentation that provides industry-leading safety education to students in Public, Catholic, and Mennonite Schools across Waterloo Region.

Although in-class presentations ended in March 2020, Larry’s lessons still reached more than 1,000 students, as he completed 66 presentations in the first three months of 2020, reaching 1,627 students.

Larry’s renowned presentations will begin again in 2021.

66

Total presentations by 'Lectric Larry in 2020

1627

students participated in the School Safety Program in 2020

Employee Health and Wellness

Waterloo North Hydro is committed to the mental and physical well-being of its employees. The utility has an award-winning wellness program, which has expanded each year since its inception. The wellness program combines physical and mental health training for all employees to help ensure everyone can achieve at the highest of levels.

In 2020, WNH shifted its focus from in-person wellness offerings to campaigns that encouraged employees to get out of the house and connect safely while many staff members were working remotely.

WNH adjusted its annual Eco-Challenge to allow participants to take part from home. The challenge included many activities designed to promote environmental awareness and healthy living. Activities included sustainable commuting, and encouraging employees to take a walking break during the day, as well as encouraging customers to increase their reuse of materials at home and work, a Green Thumb Challenge, a Bike Tune-Up Day, and other engaging events.

Before the implementation of COVID-19 restrictions, WNH celebrated its corporate achievements with a Breakfast Celebration in February 2020. The organization also welcomed its employees back to the office in September with a week-long celebration that included the distribution of cloth masks and an employee-led walk during the lunch hour.

The Wellness Program also provided employees with a monthly email newsletter that included health tips, recipe tips, and mental health awareness information.

Sustainability and Energy Efficiency

Waterloo North Hydro is committed to preserving its natural surroundings and encouraging environmental mindfulness amongst its employees. The Administrative Building and Service Center has a LEED silver certification, and its efficiency features have helped reduce electricity and water consumption since its opening.

WNH’s Green Team led several initiatives in 2020 aimed at further reducing the utility’s carbon footprint and encouraging environmental stewardship in all employees. The organization’s commitment to recycling and waste reduction helped divert 13,610 kg of landfill waste in 2020. Additionally, the utility switched to 100 per cent recycled paper for its paper towels and changed all towel dispensers to reduce the number of paper towels used throughout the building. The project is expected to reduce paper towel costs moving forward by approximately 50 per cent.

Bulb Recycling

WNH offered employees the opportunity to recycle Incandescent, Halogen, Compact Fluorescent, MR-16, PAR, BR, and LED bulbs from their homes.

Battery Recycling

WNH collected 1,035 lbs of batteries for recycling since the program began in 2013. That’s approximately the weight of a polar bear.

Coffee Bag Recycling

WNH uses Terracycle bins to dispose of empty coffee bags that are processed into raw materials that can be reused instead of being sent to a landfill.

Community Support

It has never been more important to support the charities and organizations that improve lives for those in Waterloo Region. The pandemic highlighted the important work done by local groups, and Waterloo North Hydro was once again proud to support both the United Way Waterloo Communities and The Food Bank of Waterloo Region through charitable campaigns in 2020.

United Way Waterloo Region Communities

We raised $11,300 in support of the United Way in 2020. Our traditional annual campaign looked slightly different this year, as physical distancing restrictions meant a number of popular internal events could not be run, but employees raised funds to support the community through a combination of donations, and events including a turkey raffle, a silent auction, two samosa sales and a 50/50 draw.

Yearly Contributions

The Food Bank of Waterloo Region

WNH and its customers also came together to donate more than 6,400 meals to The Food Bank of Waterloo Region through a combination of eBilling campaigns, and internal donations. In addition to supporting The Food Bank, the eBilling campaigns led to an increase of more than 750 eBilling subscribers.

This is the third year WNH has supported The Food Bank of Waterloo Region through its fall eBilling campaign, resulting in a total of more than 15,000 healthy meals being donated to those in need.

WNH Also Supports

The Movember Movement
Christmas Family Sponsorship
REEP Green Solutions
Children’s Safety Village
Conestoga College’s Powerline Maintainer Program
Wilfrid Laurier University
University of Waterloo Engineering Program
MySafeWork

Customer Communication

Waterloo North Hydro focuses on proactive and meaningful communications as a way to provide value to our customers. Increasingly, customers are seeking digital-based communications to allow them to access content wherever they may be.

WNH met customer needs through an increased commitment to digital communication. In addition to quarterly electronic newsletters sent to residential and business customers, WNH enhanced its communication efforts by digitizing its Pre-Construction and Pre-Design notices, as well as supplementing traditional paper notices with electronic copies of Planned Outage notices. The digitized versions of the notices improved upon the paper versions with the addition of coloured maps, important links and contact details. This gave WNH a new avenue to reach its customers with notifications and ensured customers were receiving important updates in real-time.

Electronic communication has proven to be an effective way to communicate with customers. WNH’s open rate for its email communications sent in 2020 was 60 per cent. The COVID-19 pandemic allowed WNH an opportunity to increase its email communication to help keep customers abreast of changes with rates, office closures, and safety precautions.

In addition to emails, and social media messages, WNH shares important information through its corporate website. To help customers understand the support available to them during the pandemic, WNH created dedicated web pages. The pages provided updates on changes to office hours, rates, and other COVID-19 related news. In 2020, the site had more than 258,000 page views and 71,000 new visitors. This is an increase in pageviews of more than 49 per cent over 2019, as customers continued to look online for important information.

WNH’s Facebook and Twitter accounts both saw an increase in followers and interactions. The accounts provide messaging on safety, energy efficiency, customer support programs, online tools, severe weather alerts, fraud warnings, and unplanned power interruptions. WNH also has a LinkedIn account, which is primarily used to shares business-related information and corporate news with its followers.

Twitter Followers 2013-2020

49%

increase in web page views in 2020

Partners

To provide the best service to our customers and to ensure we remain on the cutting edge of new technologies, industry standards, and best practices, Waterloo North Hydro has formed long-standing partnerships with organizations that help bring value to everything we do.

Our partnerships increased in 2020, as we partnered with WR Community Energy, a collaborative organization that helps raise energy literacy, integrate energy considerations into land development and planning, and delivers research, innovation, technology, and support. Visit wrcommunityenergy.ca for more.

We are also members of the following:

Electricity Distributors Association

Sustainable Waterloo Region

Greater Kitchener-Waterloo Chamber
of Commerce

Our Partners Include

Future Growth

Waterloo North Hydro’s connections to all aspects of its service territory continue to strengthen. Ensuring its infrastructure can adequately prepare for future growth while continuing to serve existing customers is an important part of the organization’s overall corporate vision.

In 2020, WNH invested more than $18.8 million in new and upgraded infrastructure to ensure an adequate and reliable supply of power is available to meet customer needs and enable economic growth in the region. Capital investments are used to replace aging poles, overhead lines, and underground distribution systems in residential subdivisions, as well as transformers, and substation equipment.

WNH completed a number of internal projects, including the introduction of a new Human Resources and Payroll platform, and the introduction of Automated Utility Design software for overhead pole line design. WNH is the first utility in Ontario to introduce the AUD software and in future years, the program will be rolled into underground design and service connections, which will help improve efficiencies and benefit both the organization and the customers we serve.

Customer Base Growth

Capital Assets ($000's)

Value to shareholders

Waterloo North Hydro continues to achieve strong financial performance by balancing system reliability and service while minimizing controllable costs associated with operating, maintenance, and administration. For the year ending December 31, 2020, net income from operations amounted to $6,720,000 for a return on equity of 6.56 per cent.

Return on Equity

Financial
Reports

Waterloo North Hydro delivered approximately 1,437 gigawatt-hours (GWh) of energy to 58,458 customers in 2020, a three per cent decrease from 2019. WNH’s customer base has seen steady growth over the past five years. While the customer base has continued to grow, the prevalence of energy efficient products for the home has led to a slow decrease in customer consumption. The population within WNH’s service territory is expected to continue to grow steadily, allowing for sustainable revenue generation.

ELECTRICITY SALES (GWh)

Financial Highlights ($000's)

Energy Sales

Distribution Revenues

Net Income from Operations

Capital Assets

Long-Term Debt

Value Creation Since Incorporation

Awards

WNH received two Canada’s Safest Employer Awards. The utility was awarded Gold for the 2020 Canada’s Safest Utilities and Electrical Employer Award, and the Excellence Award in the category of Best Wellness and Psychological Safety Program from Canada’s Safest Employers.

See 2020 Winners

For the fifth consecutive year, the utility was also recognized as one of Waterloo Area’s Top Employer for 2021.

Learn More

See 2020 Winners

For the fifth consecutive year, the utility was also recognized as one of Waterloo Area’s Top Employer for 2021.

Learn More

WNH also received the Gold Award for Psychological Safety in 2019. This video shows why WNH is considered an industry leader in psychological safety and employee well-being.

Corporate Structure

The Board of Directors of Waterloo North Hydro Inc. are appointed by the WNH Holding Corporation and are responsible for the overall direction of the company. Day-to-day leadership and management of the corporation are delegated to the Chief Executive Officer and the Leadership Team.

Executive

Rene W. Gatien

President & Chief Executive Officer

Albert P. Singh

Vice-President, Finance and Chief Financial Officer

Mark Dillon

Vice-President, Information Technology Services

Dorothy Moryc

Vice-President, Engineering and Stations

John Stephens

Vice-President, Operations

Board of Directors

Tim Martin; Michael Pley (Chair); Joe Nowak (Township of Wellesley Mayor); Sandy Shantz (Township of Woolwich Mayor); Dave Jaworsky (City of Waterloo Mayor); Arnold Drung; Jeff Henry; Micheal Kelly (Vice-Chair); Carol Leaman

Bank: Canadian Imperial Bank of Commerce.
1 King St. E, Kitchener

Counsel: Miller Thompson LLP.
295 Hagey Blvd #300, Waterloo

Auditor: KPMG
115 King St. S, Waterloo

526 Country Squire Rd,
Waterloo ON,
N2J 4G8

www.wnhydro.com

Phone: 519-886-5090
Fax: 519-746-0133