The utility's own policy is to not disconnect customers during the winter, but Ombudsman Andre Marin said Hydro One told him that suggesting they'll do so is a common tactic in the industry to get people to pay.
"Some would think these notices are fearmongering, they're bluffing, they're bullying by the state or some kind of extortion," Marin said. "I think these notices are the case of a public servant lying to the public. This is exactly why citizens lose faith in our public institutions."
All Hydro One had to say in the letters was that power could be disconnected after March if the customer did not pay, Marin said. Instead, some people were told in the dead of winter they might lose power, prompting them to call the ombudsman's office in tears, he said.
The opposition parties said Energy Minister Bob Chiarelli needed to step in and direct Hydro One to end the practice, but Chiarelli said he did not want to interfere in the ombudsman's investigation.
The utility said in a statement it will work with Marin to resolve the issue.
Marin has been looking into Hydro One billing for 13 months and said the number of complaints he has received recently passed 10,000 — the highest total for any of his investigations to date.
Marin said he urged Hydro One on Feb. 20 to end the disconnection threats, but only hours before his Wednesday news conference did they come up with a new letter. Only, he said, this one is worse, because it suggests "weather conditions," notoriously unpredictable, are a factor in the disconnection of electricity.
"I think Hydro One needs first and foremost to recognize that it is a public servant," he said. "Cutthroat tactics that may be appropriate in a competitive private-sector business are inappropriate for a public-sector organization."
His full report will be issued in the spring, but so far several themes have emerged, including incorrect bills, large "estimated" bills and unexpectedly large payments withdrawn from customers' bank accounts.
Marin highlighted one case involving a Sudbury-area man who opened his monthly statement to find a $19,000 bill — which was ultimately reduced to just $74.
Hydro One said a new customer information system led to billing issues for about 78,000 out of its 1.3 million customers and the utility is "committed" to resolving all of the issues raised by the ombudsman.
Any customer who experienced a "billing disruption" because of the new system has been excluded from the collections process for a year and customers with incorrect bills will not receive disconnection notices, Hydro One said.
About 53,000 customers had received no bill for a prolonged period, but that issue is now nearly entirely resolved, Hydro One said, while about 4,700 customers are receiving only estimated bills, down from about 31,000.