While the utility is turning the corner after racking up a substantial operating loss in 2014, the acting CEO at Ascent advises it could take up to three years “to get back on stream.”
With the departure Sept. 30 of former CEO Ron Osborne, board chairman John Laverty takes over the helm at the former St. Thomas Energy Holdings Inc., on a temporary basis. It will be Laverty’s responsibility to guide the process that will result in the hiring of an individual tasked with hauling the utility out of the financial quagmire in which it finds itself to the tune of $14 million in losses and money owing the city last year.
In its audited financial statement presented to council in September, the Ascent Group recorded an operating loss of $6.8 million last year. That compares with a $1.4 million profit in 2013.
In addition, Ascent owed the city another $7.9 million in deferred water bill payments which it collects on the city’s behalf. The money is normally transferred to the city on a monthly basis, however treasurer David Aristone told the Times-Journal at the time, “They (Ascent) may have had a cash flow issue that they couldn’t pay it to us.”
With that as the backdrop, Laverty says the process of hiring a new CEO started almost immediately.
Laverty, a former public utilities commissioner who has been “kicking around the utility industry on the governance side since 1991,” expects the CEO position to be filled early next year.
“You can get lucky and it can happen within a couple of months. Or it could stretch to perhaps six months. One of the challenges is utilities have changed. Utilities like St. Thomas and those around us are always going to have the regulated utility side but most have developed competitive business components.
“So finding someone to run a utility is probably easier than finding someone who can run both the utility and the competitive side, which is a relatively new creature.”
Under former CEO Brian Hollywood, the utility undertook a fairly rapid expansion. Osborne, on the other hand, pulled Ascent back in to focus on its core business of substation construction, traffic and street lighting, pole line construction and high-voltage maintenance services.
Laverty advises that is the track he is promoting.
“We need to do our core competencies really well. Once we’re back doing them really well and profitable again, then there will always be opportunities to reach out. We may have reached too far. Perhaps some of the processes around which jobs we bid on needed to be better.”
That included bidding on large renewable energy projects.
“There was a lot of interest on government sides to put a lot of money into them and it attracted a lot of big players. And we were not a big player but we were playing in a big-player market.
“We have a much stricter process for which jobs they can bid on. And everything is much smaller in scope.”
That does not infer Ascent will be content to stay the course on the competitive business side.
“All of the signposts tell us the status quo is probably not something that is going to be acceptable. And I think the shareholder (the City of St. Thomas) probably understands that. And is looking for that leadership to take us into the next phase of what this is going to be like in this area and particularly for St. Thomas.
“The challenge of maintaining the current size that we’re at with the utility side is that the efficiency ratings that the Ontario Energy Board expects that you have continue to get higher. And without increasing your base of customers, you can’t attain those efficiency levels. So you are forced to go out and develop relationships. And for some reason over the years we have struggled with relationship development.
Laverty indicated one of his strengths is, “I can engage people in those relationship conversations.”
And he doesn’t see his role as a caretaker CEO.
“I don’t think we can wait. I think one of the issues we are facing is time and timing. If you sit on the sidelines too long I think you tend to be bypassed. We need to be active in the discussions out there. I think Ron was beginning that process and I think we will continue to develop those.
“This is all about people relationships and helping them see the future.”
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