The Stockwell Report V1-E15

THE STOCKWELL REPORT

 

As historians look back on the present term of the Wasaga Beach Council, the year 2015 will be remembered as the year that the commercial properties along Beach One were purchased by the municipality. The purchase then kicked off a major rehabilitation of not only the heart of the longest freshwater beach in the world, but also the revitalization of the tourist industry that relies on that heart to pump the life blood of the community.

 

Generally, the purchase was well received by the ratepayers of the municipality in spite of a vocal minority of critics.

 

Like life itself, only time will tell if Council`s actions were good or bad.

 

As we are coming to the end of 2016, another major decision has been placed at Council`s doorstep: the future of Wasaga Distribution Inc.,  better known as “Wasaga Beach Hydro”.

 

The elected council, among numerous other responsibilities, represents the Town Ratepayers who are the shareholders of Wasaga Geosands Inc., the holding company of Wasaga Distribution (“WDI”), and Wasaga Resource Services Inc., the owner/operators of the local hydro commission .

 

The day-to-day operation of the facility is directed by a small group of ratepayers, recommended by the Mayor, and appointed by Council, that make up the Board of Directors of WDI.

 

The sale of the facility was in the rumour mill during the last election, in the Fall of 2014. The results of that election saw only two members of the previous council returned to office, and of those who were elected, if my memory serves me correctly, unanimously opposed a sale during the election campaign.

 

In fact, I can`t recall any candidate, old or new, supporting a proposed sale at that time. However, I certainly stand to be corrected.

 

At any rate, in January 2016 the present Council was approached by the WDI Board of Directors, ”requesting direction to embark upon a process that would result in recommendations to Town Council concerning a range of outcomes that will help best leverage, or harvest, the benefits of the Municipal asset”. Upon approval to proceed with the proposed process, the legal firm of Borden Lander Gervais was contracted to assist the local WDI in preparing that process.

 

A July 2016 report to Council stated “Of late, the Ontario Provincial Government is encouraging Local Distribution Companies (“LDCs”) to consolidate. A number of Provincial studies point to over $1B in distribution consolidation savings.”

Minister of Energy`s comments leave little room for interpretation.

 

Currently in Ontario 63 LDCs serve only 30% of all customers. WDI is one of these utilities.

 

OEB have made regulatory changes designed to help facilitate consolidation. These changes acknowledge that both shareholder and customers must benefit from consolidation.

 

Temporary tax relief also provides an incentive to consolidate.

 

Three options have been placed before Council: Retain and Grow, Merger, or Sale.

 

Given the choice, I believe that a Merger or Sale would be non-starters with the average ratepayer, based on the belief that the local Board is well managed and any merger or sale would result in higher costs to that ratepayer.

 

What the average ratepayer doesn`t realize is that the local Wasaga Beach LDC controls less than 17 percent of the monthly hydro bill. The balance of the account is split between the cost of creating electricity (generation), the delivery of electricity (transmission), regulatory costs, and debt retirement.

In other words, only $17 of a $100 hydro bill is controlled locally.

 

So, like it or not, when deciding the future of the Wasaga Beach LDC, Council is faced with a decision to Retain and Grow, Merger, or Sale.

 

This was the subject of a report from the Town’s CAO, George Vadeboncoeur at the Committee of the Whole meeting that took place earlier this week.

 

After a lengthy discussion on the subject, the following resolution was passed: “That Committee of the Whole recommend to Council that it begin a public consultation process on the future of Wasaga Distribution Inc. and Wasaga Resources Services Inc. based on the analysis and recommendations prepared by the Board of Directors of the two corporations commencing with a presentation of the Report to Council at the October 25th Council meeting.”

 

Locally this process of consolidation is evident, for example:

 

Aurora – Merged with PowerStream

Barrie – Merged with PowerStream

Georgian Bay – Purchased by Hydro One

Gravenhurst – Purchased by Veridian

Orillia – Sale to Hydro One in negotiation

Parry Sound – Merged with Lakeland

Tay – Merged with Newmarket

Midland – Pursuing sale option

Collingwood – Pursuing sale option

 

The Board of Directors of WDI have done its homework as to the future of the Hydro Commission. It has presented Council with a well thought out study that outlines three choices of operations for the future of the local Commission.

 

Council has decided that the next step in considering the future of hydro operations within the municipality must involve the Wasaga Beach Ratepayers who truly are the owners of the facility.

 

Council is not unanimous in this decision.

 

However, a majority of the Committee of the Whole of Council have voted to make available to the Wasaga Ratepayers all the background information on the subject matter, hold Public Meetings throughout the municipality to listen to the voices of the residents, and organize a process that will allow the Ratepayers the opportunity to show Council their preferences before a final decision is made.

The ratepayers of Wasaga Beach, who really own Wasaga Hydro, will be heard.

 

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