Courtney Pratt

1
Toronto Hydro Corporation
The Dynamic Tension Between Ideas and Solutions
Courtney Pratt President CEO July 14, 2003
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OPENING REMARKS

• Great ideas range from products to technology to
  public policy
• Managing innovation is a tough leadership and
  management challenge
• Dynamic tension between empowering ideas and
  practical solutions
• Where is the line between leading edge and
  bleeding edge?

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EMPOWERING IDEAS

• Willingness to invest in people and technology
• Canada ranks 15th in OECD for RD spending
• Risk tolerance
• Mistake tolerance
• Champion tolerance
• Culture of trust, openness, confidence
• Executive leadership

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PRACTICAL SOLUTIONS

• Management controls
• Hurdles or gateways
• Technology
• Markets
• Talent
• Competency fit
• Executive leadership

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CASE STUDIES

• Magnola plant, Noranda Inc.
• Interval metering
• Biodiesel fuel project, Toronto Hydro

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MAGNOLA PLANT - NORANDA INC.

• New idea
• Proprietary technology to extract magnesium from
  serpentine tailings in Asbestos, Quebec
• 63,000 tonnes to be produced each year
• 733 million in construction costs
• Lab and pilot plant testing
• Market studies
• Push to build full-scale plant

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MAGNOLA PLANT NORANDA INC.

• Challenges
• Increased, pervasive competition from low-cost
  Chinese producers
• Depressed global prices
• Outcomes
• Shut-down of plant in 2003 for one year
• Permanent closure is likely
• 811 million in write-down costs

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MAGNOLA PLANT NORANDA INC.

• Lessons learned
• Excitement for a great idea was not tempered by a
  strong and independent process of review
• Mistakes were made because of project momentum
• No such thing as asking too many questions

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INTERVAL METERING

• New idea
• Moving interval metering from large commercial
  customers to the mass market to manage demand
• Barriers
• Government policy prices fixed through 2006
• Unit costs of meters - 300
• Consumer education and behavior

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INTERVAL METERING

• Challenges
• Burning platform
• Technology
• Cost reduction
• Billing issues
• Market
• Mass installation
• People
• Lifestyle change

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BIODIESEL FUEL

• New idea
• Use soybean oil, canola oil, animal fats and
  recycled cooking oil as a clean, renewable
  substitute for diesel fuel
• 30 less ground-level ozone
• Barriers
• Availability of fuel, storage issues
• Make green initiative cost neutral
• Challenges
• Fleet size and emissions
• Shareholder Direction

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BIODIESEL FUEL

• Outcomes
• Pilot program started in Sept 01with 80 vehicles
• 400 biodiesel fuelled trucks now
• First fleet in Canada to implement

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BIODIESEL FUEL

• Lessons learned
• Empowering ideas Practical solutions
• Risk tolerance
• Mistake tolerance
• Champion tolerance
• Culture of trust, openness and confidence
• Executive leadership

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THE POWER OF A GOOD IDEA

• Spin-off effects
• Removal of 14.7 / litre road tax by provincial
  government
• Removal of 4 / litre excise tax by federal
  government
• Federal government commitment to produce 5
  million litres in Canada by 2006, part of Kyoto
  commitment

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THE POWER OF A GOOD IDEA

• New plant in Sudbury will provide 13 million in
  economic growth to region, crops grown locally
• Full implementation by City of Brampton, City of
  Toronto, Kingston Transit, City of Guelph, Bruce
  Power
• Pilot program Winnipeg transit system, Montreal
  transit system, Calgary fire department

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CLOSING REMARKS

• New ideas become great ideas when they are
  managed effectively and the stars align
• If you dont drill wells, you wont find oil
• Great champions and great execution
• Great ideas can produce a domino effect
• Industry growth
• Product extensions
• New technology
• Changes in public policy