COMPENSATION. Toronto Hydro-Electric System Limited EB Exhibit C2 Tab 1 Schedule 5 ORIGINAL Page 1 of 10

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1 EB-0-0 Tab Schedule Page of COMPENSATION WORKFORCE STAFFING PLAN In the coming years, THESL will be faced with three major impacts on staffing an ageing workforce resulting in an exceptional rate of retirements with the associated loss of skilled, experienced workers and entry of new employees; modernization of the distribution grid and an unprecedented infrastructure renewal plan; and transformation of the traditional customer service model to an increasingly more sophisticated and valuebased model. 0 The Electricity Industry s Workforce Challenges An ageing workforce is one of the most significant human resource issues facing the electricity industry in planning for future skill and competency requirements. Although the industry has always had to plan for employees leaving the workforce through retirement, the magnitude and impact of projected retirements by the baby-boom generation far exceeds the industry s turnover experience. The Sustainable Electricity Annual Report 00, released in June 0 by the Canadian Electricity Association ( CEA ), confirmed Human Resources as one of the key industry challenges. The report states: Attracting qualified skilled workers to the electricity industry remains the key human resource challenge, especially given the impending new capital investment cycle. This challenge is further exacerbated by the retirements and attrition of experienced utility personnel from the baby boomer generation. The baby boom generation encompasses people born between and the early 0s.

2 EB-0-0 Tab Schedule Page of The report goes on to reference the 00 Labour Market Information Study undertaken by the Electricity Sector Council which reported: Based on employer estimates,.% of the current electricity workforce is expected to retire between 00 and 0, a higher annual rate of retirement than was estimated in the 00 CEA Sector Study. Included in these retirement estimates are employees working in operationally critical positions. The study further stated that percent of employees in the distribution line of business were over years of age. Replacing departing employees also has proven to be a challenge, particularly for those jobs that are central to industry operations. Employers responding to the study reported unfilled vacancies for Managers and Supervisors, 0 unfilled vacancies for Engineers and Technicians/Technologists and vacancies for Trades. 0 THESL s Ageing Workforce Workforce statistics reported in the 00 Labour Market Information Study are reflected in THESL s own situation and projections, and in some instances, THESL s situation is even more challenging. Between 0 to 0, over 0 THESL employees are projected to retire, representing percent of its current workforce. By contrast to the Labour Market Study finding of percent, percent of THESL s employees are in the age group of and over, with 0 percent at age or over. Age is significant in that it is the minimum age of retirement for an unreduced pension under OMERS pension eligibility rules. With the amalgamation of the six municipal utilities in into THESL, workforce adjustments were required to achieve economies of scale. Voluntary separation and retirement packages, offered in and 00, were made available to all employees,

3 EB-0-0 Tab Schedule Page of regardless of job or skill set. The result was the departure of employees with short or long tenure, leaving a middle group of employees who are now approaching retirement in large numbers. The current demographic profile of THESL s total workforce indicates an average age of. Historically, the average retirement age of a THESL employee has been years of age. Retirements to date continue to reflect as the average age when employees leave THESL s employment. The decision to retire is clearly a personal choice, influenced by many factors including financial, family, life style and health considerations, as well as personal readiness to make a critical life change. Nevertheless, it is incumbent on THESL to plan for future workforce changes. 0 To project THESL s retirements, THESL used the following criteria: OMERS Normal Retirement Age ( NRA ) and THESL s average retirement age (i.e., ), combined with eligibility for an unreduced-pension-under-omers. OMERS eligibility criteria for an unreduced pension stipulate that a member must be a minimum of years of age with 0 years of service, or a combination of minimum age with age and years of service totalling 0 ( 0 Factor ), or NRA. With these OMERS criteria and THESL s historical average retirement age of as the basis for the retirement projection, THESL estimates that over 0 employees will retire from 0 to 0. As of June 0, 0, actual retirements of a projected have occurred with an additional retirements expected in 0 based on formal notifications and retirement planning initiated by employees. See Table below for the forecast of retirements to 0. Table : Forecast Retirements Year TOTAL Number of retirements 0 Includes projected retirements from 00 which did not occur and have been rolled forward.

4 EB-0-0 Tab Schedule Page of Over 0 percent of the potential retirements will occur in supervisory, engineering, trades and technical positions, which could deplete these job categories, on average, by half of their current staffing complement. These positions are core to implementing the distribution system renewal plan, delivering on the Green Energy and Green Economy Act, 00 ( GEA ) initiatives and sustaining safe and reliable operations into the future. Distribution System Renewal In 0, THESL continues to upgrade its distribution system infrastructure. In terms of the labour necessary for plan implementation, THESL projects a shortfall based on current staffing levels of approximately 0 full-time employees ( FTEs ) in 0. Future resource gaps are expected to be similar given the planned investment levels. Due to the retirements projected for the coming years, there is a pressing need to address the shortage. At the same time that it needs skills to design and build, THESL also will require excellent leadership to reinforce strategic direction, sustain momentum and ensure the efficient and safe operation of the system. This leadership will be the linchpin as the composition of the workforce changes and workers with varying knowledge and experience levels work side by side, critical system knowledge is transferred and the capital plan heightens work demands. 0 To support the capital plan, a multi-faceted approach is required to bridge the gap in resources required for the plan. Even if this number of resources could be hired from the labour market, THESL could not absorb a new employee intake of that magnitude without potentially compromising safety, adequate skills attainment and efficient, productive operations. Therefore, a variety of options have been adopted, including hiring new workers, ramping up the apprenticeship programs and using contractors. From an internal staffing perspective, skills requirements will focus on trades and technical jobs. Overhead and Underground trades as well as Designers and Engineers will comprise the core of this workforce. Critical strategic competencies of expert

5 EB-0-0 Tab Schedule Page of planning, risk management and leadership will be key to sustaining operational excellence during this period of necessary system refurbishment. Value to the Customer Initiatives such as Smart Metering and Time-of-Use ( TOU ) billing give customers critical data to understand their energy usage and impact on their electricity bills. With a growing emphasis on managing energy consumption and associated costs, customers will expect service that extends beyond traditional transactions, such as new account set up and bill analysis. Heightened service expectations, increasingly a market norm, will require innovative technologies that deploy real-time information or alerts and / customer service options, with access to highly knowledgeable staff who can translate complex billing data into sound analysis and advise on energy programs to assist the customer. Acquiring and building talent to provide wide-ranging services to an increasingly sophisticated customer base will be required. Customer service employees will need to be equipped to offer a wide spectrum of services from answering bill enquiries to providing advice and guidance on energy consumption management and various program offerings. In-depth training will be needed to advance their skills and knowledge. 0 Staffing Strategy A skilled and knowledgeable workforce is a crucial asset for THESL to undertake its capital plan, implement highly technical initiatives including those associated with grid modernization, support value-added customer services and technologies such as Smart Metering and web-based services and build a sustainable workforce for the future. Training and development of the workforce to meet new skills and knowledge requirements, as well as extensive training for harmonized jobs of broader scope, are essential. This undertaking must occur while continuing to meet customers expectations for reliable and responsive service and sustaining productivity. With the expected

6 EB-0-0 Tab Schedule Page of retirement of over 0 employees from THESL s workforce from 0-0 coinciding with the significant increase in capital work, THESL has begun to make corresponding changes in its full-time staff complement and contingent resourcing levels. THESL s workforce strategy consists of five key components: ) Hiring new employees at a pace that ensures continued maintenance of safety and effective integration; ) Utilizing the considerable experience of its older workforce for training purposes; ) Leveraging productivity efforts to improve and sustain efficiencies; ) Managing performance and development throughout the employee s career; and ) Engaging external resources to bridge resource gaps on a contingent basis. 0 With respect to its staffing, THESL is managing the attrition issue by: leveraging seasoned workers approaching retirement to use their skills and experience to train and coach new employees; replacing retiring employees; and increasing the full-time complement in trades and technical jobs. Strengthening leadership capability is also a priority. THESL secured external resources to support the delivery of the 0 Capital Program by entering into term contracts with Power Line Plus, Entera and AECON on January, 0. The Design-Build firms provide civil and electrical design, construction and material acquisition services by leveraging the resources of a combined Engineering and construction firms. This component of the staffing strategy will continue to be utilized in 0. Selective replenishment or augmenting of other jobs will be done to meet business needs as required in the normal course of business such as complying with new business rules (e.g., International Financial Reporting Standards IFRS ) and in particular to support the hiring process and the growth in training and development that will occur as a result

7 EB-0-0 Tab Schedule Page of of acquiring new staff. Safety education and training will be key focus areas to ensure that both new employees and contractors are fully prepared to carry out their duties in a safe and efficient manner. 0 In 0, over 0 new employees will be hired into leadership, trades and technical positions, along with engaging contractors. Into the future, THESL will need to continue hiring and contracting at a rate that can be sustained while ensuring safe operation. Having these resources in place as they are needed is essential to THESL s ability to build and maintain a safe and reliable distribution system for its customers. Trades and Technical Jobs Forty-eight percent of THESL s current workforce consists of trades and technical jobs. Although the ageing workforce cuts across the business, the primary focus of the workforce staffing plan is to deal with these specific roles given the critical nature they play in the safe and reliable design, construction and maintenance of THESL s distribution system. The profile for these trades and technical jobs in THESL places their average age at. Based on Statistics Canada data from the 00 Census,. percent of the labour force was then years or older. This demographic profile, coupled with forecast labour and skills shortages in our industry, suggests there will be considerable competition for these particular skills in the labour market in the future, especially for specialized jobs. Attracting fully competent trades and technical resources will be a challenge. Retention is also likely to be a challenge as the need for these resources is not unique to THESL. Replenishing Trades and Technical Jobs To replenish the skills shortfall created by exiting employees, external recruitment of fully competent workers cannot be relied on as the sole means of replenishing THESL s

8 EB-0-0 Tab Schedule Page of workforce nor would it be advisable considering the impact a high volume of new recruits would have on safety, training and productivity. However, THESL s plan is to hire experienced workers when available and new entrants as apprentices to trades and technical positions, but at a safe and sustainable pace. Leveraging its status as the only recognized Ontario municipality with Training Delivery Agent status for its Power-line Technician program, THESL will build on its trades training expertise and continue to invest in its internal apprenticeship programs. It is expected that trades apprentices will require up to five years to become fully competent and capable of safely performing all aspects of the job. This approach is not without its own challenges, specifically related to retention. It is anticipated that these employees will be highly sought after both while in training and even more so, once they have achieved proficiency in their trade or skill. 0 In 00, THESL initiated a Trades School within THESL because the basic training that new hires had received externally was insufficient to maintain safe and efficient operations and satisfactory customer service in such a complex distribution territory. Between 00 and 00, Trades apprentices entered the THESL program. Twenty percent of these apprentices have graduated to date and remain with THESL. Over percent of apprentices have continued in the program. In 0, THESL expects to have apprentices participating in the apprenticeship programs. Trades apprentices include Overhead, Underground Powerline Persons, Protection & Control Technicians and Power System Controllers. As noted in Table below, the apprentice-staffing plan includes the hiring of trades apprentices, as well as graduation of trades apprentices. For Trades apprentices to graduate, they need to complete,000 hours of Underground and Overhead line work, which usually takes. years. From 0 to 0, approximately 0 technical

9 EB-0-0 Tab Schedule Page of apprentices, in design and engineering, will be hired and deployed to the distribution asset renewal plan or grid modernization. Hiring Plan for Trades and Technical Jobs Table : Trades Apprentices Staffing Plan (cumulative) Description 00 Historical 0 Bridge 0 Test Trades 0 Graduating Table : Technical Apprentice Staffing Plan (cumulative) Description 00 Historical 0 Bridge 0 Test Technical The increase in hiring of apprentices is attributable to the.-year lead-time required for them to become fully competent in advance of anticipated retirements and the additional resources required to achieve the capital plan. THESL requires some overlap and transitioning between experienced and newly hired employees to ensure sufficient skills development of the entrants and knowledge transfer between these two groups. Training Costs of the Apprenticeship Program Table illustrates the total cost associated with training (excluding net labour and payroll costs) for the Apprenticeship Program. These costs include trades apprentices in a.- year apprenticeship. From 00 to 0 the headcount listed below is for all trades apprentices in the program. Table : Apprenticeship Program Headcount and Costs Year 00 Historical 0 Bridge 0 Test Total Headcount Year End 0 Cost ($ millions) 0...0

10 EB-0-0 Tab Schedule Page of Conclusion THESL must confront three staffing challenges: the unprecedented projected loss of skills and experience as its ageing workforce begins to retire along with the influx of new employees; an accelerated plan to modernize the grid and renew its distribution system; and the enhanced customer service model. At the same time, THESL must continue to fulfill its responsibility to customers by providing reliable and responsive service and sustaining productivity. An overall ageing labour force and uncertain labour market conditions for industry-specific jobs create recruitment and retention issues, adding further to the challenges THESL must face. Fully competent workers who are well trained and skilled in performing the critical components of their role are needed to fill the jobs that are essential to THESL meeting its responsibility. To ensure that these individuals are in place and ready to deliver on the capital plan and other business requirements, THESL has embarked on a staffing plan to hire, train and develop the workers who are needed to build, maintain and support a reliable distribution system and to serve its customers.