Summary of Findings
The Hamilton-Wentworth-Philips Utilities Management Corporation
WHAT IS IT ABOUT?
Handing over the operation and maintenance of a publicly owned utility to a private company, Philip Utilities Management Corporation, owned 70% by Philip services and 30% by the Ontario Teachers Pension Plan board.
WHAT KIND OF PPP?
An operations and maintenance service contract using publicly owned infrastructure.
THE CLAIMS:
- Cost savings
- Improved productivity through technological innovation
- Improved labour relations through successor rights, guarantees and bonuses for cost reductions
- Less political capital spending
- Maintenance of environmental standards
- Economic development promises and guarantees
- Risk transfer
- Proponents call the PPP a model for re-inventing government and for competing in the new economy
THE REALITY
- The contract was awarded to PUMC without being publicly tendered.
- PUMC receives the first $1 million on any cost-savings with any extra savings being shared with the Regional Authority on a 60-40 % basis. Gross profits to PUMC are estimated to be $4.8 million per year.
- PUMCs promised operational cost-savings involved reducing the number of employees by half since 1995. Short term guarantees were just that. Pressure is being put on remaining personnel to multitask.
- Innovation and capital improvements remain the responsibility of the Regional Authority but on the advice of PUMC which stands to gain from any operating efficiencies which might result.
- PUMC has claimed a share in cost-savings even when Hamilton-Wentworth Regional Authority initiated them.
- There have been serious environmental problems since PUMC took over, the cost of which has been borne by region.
- Risk transfer has been minimal.
- Senior bureaucrats who were involved in the decision to award the contract to PUMC have left the Hamilton - Wentworth Regional Authority to work for PUMC.
- Crucial information is not available to the public. For example, annual performance reviews have not been conducted since 1995, when PUMC failed abysmally.
- Philip has moved its head office to Hamilton but has otherwise not delivered on its extensive economic development promises.
- PUMCs parent company, Philip Service, has been so fragile that its performance guarantees of PUMC have meant little. In May 1999, PUMC was bought by Azurix Corp. and is now under foreign ownership and control.
- This project raises important ethical questions concerning how employee pension funds are invested.
opeiu 491