In any kind of business, the customer is fundamental. But for utility companies such as Toronto’s Hydro One Inc., which operates in an industry subject to natural disasters and other unforeseeable problems, keeping customers happy can be difficult. Given the pressures of serving the public sector, it’s no wonder utility companies are often ranked among the lowest in consumer satisfaction. Who else to blame when the power goes out but the company that provides it?
Because Hydro One’s cash from operations is insufficient for meeting capital expenditures, dividends, and other liquidity requirements, company vice president and treasurer Ali Suleman must appeal to another sort of customer—the bond investor—for funds to keep the lights on and regular customers happy. “You need money to meet all your strategic objectives,” Suleman says, noting that approximately 60 percent of his company’s rate base (or assets used to deliver safe and reliable power) is funded with debt. With more than $9 billion in outstanding debt, most of which has been financed in the Canadian debt capital market, Hydro One ranks among the country’s top nonfinancial corporate issuers.
Employed by the company’s predecessor, Ontario Hydro, since 1991, Suleman assumed the role of treasurer when Hydro One formed in 1999, and he later took on the role of vice president in 2004. Whereas most customers remain unaware of the negotiations that fund their day-to-day electric needs, Suleman never forgets how his job helps meet those needs. “We would like to earn a fair return on an asset,” he says. “It might be a financial return or a relationship. But we also want to make sure the electricity rates are low, so you need to balance and learn to listen.”
Needless to say, funding the province’s foremost electricity-transmission and electricity-distribution company keeps Suleman busy. While no two days are alike, chances are you’ll find him consulting with his staff, negotiating deals with external stakeholders, advising one of three committees he sits on, or addressing other urgent matters. Between meetings, if he’s not catching up on calls and e-mails, Suleman reviews and approves invoices, payments, wires, control and compliance reports, and time exceptions.
“I do delegate quite a bit,” Suleman says. “I am very blessed with good staff.” Overseeing 12 employees, he proudly extends an “open-door policy” but never lets his crew off easy. “The staff basically walk in and present their issues,” he says, but “they don’t just bring the issue; they also bring a potential solution.”
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“I want to make sure we reach out to every $1 million–$2 million investor in our new issues because, in due course, they will become $10 million–$20 million investors. We hope to capture those and maintain the wide distribution we enjoy today.”
Occasionally, Suleman also looks to his counterparts to exchange fundraising strategies, citing his three-plus-year membership with FEI Canada, a networking organization for financial executives. “[FEI] gives me the opportunity to connect with my peers,” he says, although his busy schedule allows him to attend only a couple of the organization’s many annual events.Indeed, things weren’t always so rosy for Hydro One, which currently employs more than 5,500 full-time staff and has four subsidiaries operating in Ontario. In 2002, the utility giant encountered what Suleman calls “the perfect storm,” a series of company-specific events “perhaps even more challenging than the 2008 financial crisis.” With an equity IPO under way, Hydro One faced an impending increase in debt maturity, rating downgrades, very high working capital requirements in a newly opened and volatile electricity market, and other issues. But thanks to Suleman’s team, the company negotiated with banks and revised its commercial paper-issuing policy and strategy, among other steps, alleviating its financial strain and proving it could handle seemingly anything. “It was quite some time ago,” he confesses, “but the experience is still fresh and vivid, along with the lessons learned. Liquidity is key.”
Serving the public sector can prove challenging, particularly when a company offers essential, daily services. Constantly changing markets and maintaining long-term financial status are only two obvious challenges that make Suleman’s job demanding but rewarding. “When operating in the public sector, one is often faced with seemingly conflicting objectives,” he says. “The people on the other side have a job to do—they have a process to follow.”
Once everyone understands that, he continues, regardless of what sector you’re in, “I think life becomes a lot easier for everyone.”