May 30, 2011

Stakeholder Consultation Workshop on Compensation Cost Benchmarking Study

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Facilitator’s Remarks – Bob Betts

Introductions Facilitator, Bob Betts & OPTIMUS | SBR support team

Meeting Facilities

Safety Review

Note taking process

Participant Introductions

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Agenda

9:30 AM – Welcome Allan Cowan, Director, Major Applications, Hydro One Networks

9:40 AM – Introductions, Background on Compensation Cost Benchmarking Study and Key Points of Agreement from February 10th Stakeholder Session Bob Betts, Facilitator, Optimus |SBR

10:00 AM – Approach to Compensation Cost Benchmarking Study &

Facilitated Discussion Iain Morris, Mercer Bob Betts

10:45 AM – BREAK

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Agenda Cont’d

11:00 AM – Approach to Compensation Cost Benchmarking Study & Facilitated Discussion

Iain Morris Bob Betts

11:45 AM – Next Steps and Closing Remarks Bob Betts/ Allan Cowan

12:00 PM – Adjourn

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Meeting Process

Mobile phones “Off” or “Silenced”

Avoid side discussions while others speaking

All questions are good ones

Materials and notes will be posted on Hydro One’s Regulatory Website:

www.HydroOne.com/RegulatoryAffairs

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Compensation Cost Study Background

Board Direction to do a study in 2007/2008 TX Mercer Study filed in 2009/2010 TX Board Directed update in 2011/2012 TX

The Board directs Hydro One to revisit its compensation cost benchmarking study in an effort to more appropriately compare compensation costs to those of other regulated transmission and/or distribution utilities in North America. More robust evidence on initiatives to achieve a level of costs per

employee closer to market value. Compensation increases to be matched with demonstrated

productivity gains. Hydro One to consult with stakeholders about how the Mercer study

should be updated and expanded to produce such analyses.

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Feb. 10, 2011 Consultation- Key Points of Agreement (1)

a) Principle objective - to revisit the Mercer Study to appropriately compare HONI compensation costs to those of regulated Transmission and Distribution utilities in North America.

b) Keep it simple to entice survey participants

c) Be independent, testable, repeatable and market based‐d) Provide participants with the assurance that their

information could not be attributable to them

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Feb. 10, 2011 Consultation- Key Points of Agreement (2)

e) Be based on the groups surveyed in the Mercer study and expanded as deemed appropriate by the consultant

f) Mirror the scoping in the Mercer study for peer selection, job classes, etc, changed as deemed appropriate by the consultant

g) Enable reasonable comparison to the last Mercer study and provide trending analysis for Hydro

h) Consider median, or the mean, or both.

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Feb. 10, 2011 Consultation- Key Points of Agreement (3)

i) Consider adjustments to reflect regional costs of living amongst the study participants

j) No attribution of data to particular participant

k) Request data about pension as a percentage of total benefits, and benefits as a percentage of compensation

l) Rely on the expertise of the selected consultant to recommend appropriate changes in methodology and assumptions.

m) Consultant to recommend productivity metric or metrics that can be used for internal comparisons using readily available internal data

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The May 30, 2011 Consultation Task

To provide further input on the proposed approach the consultant will undertake in the study.

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