Holdco – Should their finances be Public?

Holdco is the holding company for Lakefront Utilities and Lakefront Utility Services Inc. which provide water and electricity to Cobourg and is owned by the Towns of Cobourg (most shares) and Cramahe (one share).  Although Holdco issued annual reports in 2017 and 2016 for the previous years, these reports have minimal financial information.  It may be possible to obtain their financial reports but they do not make it easy and I have not yet seen a report for 2017. Personally, I have not been able to find any Holdco Financial reports online. In addition, they have had esoteric battles with the Cobourg Taxpayers Association (CTA) over details of their activity.  But they do pay a dividend to Cobourg each year – the evidence for that is that this mysterious dividend is cited as a funding source for projects that are not budgeted.

Derek Paul at Venture 13 Grand Opening
Derek Paul at Venture 13 Grand Opening

Although Holdco items do appear in Cobourg’s budget, there is no detail provided. Because of this lack of transparency, it has become an issue with the council – see what candidates say about this below.

One of the projects that Holdco (or rather subsidiary Lakefront Utility Services Inc LUSI) has recently initiated is a joint venture with other companies to put Solar panels on the roof of the Venture 13 building.  As a separate company, they went into this project without consulting the public then obtained an agreement from the Town that they would buy the electricity they produced over a 25 year period at a fixed rate.  At right is a picture of Dereck Paul, President & CEO of Lakefront Utility Services Inc presenting this project at the Venture 13 opening ceremony.  Without Holdco financial data – we will never know if Doug Ford’s actions on the Green Energy act and Hydro rates will impact this contract.  More on the project in the link below.

Note that candidates were asked to keep their answers to be no longer than about 40 words (averaged across all answers) but some went over that limit.  As a result, their answers are abbreviated.  A big thank you to those who respected my request.

Mayor

John Henderson (acclaimed)

Holdco is part of Cobourg’s Holding’s Inc. It is defined as an Independent Board under the OBCA (Ontario Business Corporation Act) and The Electricity Act. The mayor traditionally sits as a member of this Board to ensure open dialogue remains between the Town Council, CAO (Mr. Peacock) and Mr. Dereck Paul, President. Holdco Inc. has completed Annual Consolidated Reports that reflect its income statement over the period from 2014-2017 which are in the public domain. The Annual Report is already made public.

If the question is asking for more finances to be released to the public beyond the Consolidated Report, then I am open to having discussions with members of the new Council, Stephen Peacock: CAO Town of Cobourg and Dereck Paul, President. I would want to ensure that with this further release of finances that all personal information would be protected under established privacy standards. [Revised 3 Oct 2018]

Deputy Mayor

Randy Curtis It is my understanding that the Holdco financial summary information is available online. Additional detailed financial information can be obtained from Holdco if requested. I believe access and disclosure of annual financial statements should be public.
Suzanne Séguin

Examine the legal structure of Holdco, and if the 99% of public ownership allows the finances to be made public, then yes they should be.

Councillors

Nicole Beatty

I believe that public assets held and/or owned by public entities should be made publicly available.

Aaron Burchat I support Holdco finances being made public. I believe this should be done as an Annual General Meeting that the board can host for the public as an update on how our reserves have fared the previous year, and what the expectations are for the following year.
Adam Bureau

I believe all town owned company finances should be made public. After all, the tax payers of Cobourg own it

Emily Chorley

Yes, this is about good financial stewardship. Placing this information in the public domain would increase oversight, transparency and accountability. Residents need to know that their taxes are being spent efficiently and effectively, giving them good value for money.

Brian Darling No, because of legalities.  All utility companies are independent and run by a board that is governed by Ontario Energy Board regulations and are given that mandate by the Province.  Holdco does provide an annual report and the interest and dividend annual amounts are public information and the data showing where these amounts are spent is publicly shared at the annual Town of Cobourg budget meetings.
Karl Vom Dorff Yes. Should Holdco be unable to meet their financial obligations through operations or via poor management, there’s always the possibility taxes could be raised to make up the difference. Releasing statements may increase accountability and allow Cobourg residents to keep Holdco’s financials under a watchful eye. A similar situation occurred in North Bay. By Order MO-3170, the Information and Privacy Commissioner forced North Bay Hydro Holdings Ltd. to release their financial statements. In North Bay’s case, disclosure set a legal precedent Holdco can’t ignore. [Karl kept within average word limit – other answers were short]
Travis Hoover  Yes
Miriam Mutton

Yes.  I support public ownership of our utility companies and believe Holdco may need to improve communication with all its shareholders including more detailed public reports.

Johnny Percolides Absolutely they should be made public, why are they not? It has been very insulting to the tax payers for many years that previous Council members have allowed this and that they have not been transparent with this issue.

Note: Candidates listed in last name alphabetical order.

The next question to be answered is Should the Town buy the Park Theatre?

NEWS Update:  There will be an additional all candidates meeting on October 12 sponsored by Sustainable Cobourg.  Details on all such meetings here.

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Walter L. Luedtke

Hahahaha!
Just watch the CTA zealots and their tax fighter upvoters knock themselves out over Holdco.
Been going on for years.
And will continue as the most important challenge in the daily lives of us poor Cobourg dupes.

Bob Robertson

Holdco is a PRIVATE business owned by the Town of Cobourg. Details should
remain with the corporation and its Board of Directors for competition reasons.
Current reporting method should continue.

Ken Strauss

Competitive reasons? Who are Holdco’s competitors?

Bryan

Before 2000 the Public Utilities Commission was part of the Town of Cobourg and subject to the same reporting and disclosure requirements as the Town. Why should the introduction of a corporate shield (HOLDCO, LUI, LUSI) eliminate the requirement for financial and accountability reporting to the owners? What are they trying to hide? As noted by Karl, MO-3170 has removed the ability of municipal utility companies to hide behind a corporate shield. The existence of MO-3170 has only come to light very recently

Bruce R. Craig

What competition?

Frenchy

John (Henderson),
1. Does the Mayor of Cobourg automatically get a seat on the Board at LUSI?
2. Thankfully Mr. Draper abbreviated your non-answer/bafflegab.
3. Is this the type of (un)clear communication we should expect of you as our mayor for the next 4 years?

gerinator

Q: 1 – not necessarily for instance it could be a Councilor holding the Planning file; but it is a given that the Mayor has dibs. Q3: Yes it is. They (Brocannier in the past) have hidden behind this ‘public company’ facade. Again, I maintain the dividends should not be directed toward UN-budgeted projects but rather toward capital infrastructure fixes, upgrades. So no, Holdco should not be subsidizing the V13/LUSI/Town deal!!!! I wonder how many other persons and/or companies got a 25 year fixed rate?

Frenchy

” Holdco and similar Boards do not report directly to the public. “
Another question(s) John…
How many other boards are there and what are their names? And, just who do they report to?

Frenchy

On another note… I just watched a debate on YourTV between Randy Curtis and Suzanne Seguin. Unless I missed it, I thought it funny that I didn’t hear about it here or at “The Hub”.

Frenchy

You can catch interviews with the candidates for Deputy Mayor on YourTV today at 1:00 and 1:30 p.m., and a rebroadcast of their debate tomorrow at noon. Interesting stuff. https://www.yourtv.tv/cobourg-port-hope/schedule
Channel 700 for Cogeco subscribers.
Both the interviews and debate will be broadcasted several times over the next few days. Check the schedule.

Frenchy

For non Cogeco subscribers, or if you want to watch the interviews on your own schedule, YouTube has them here: https://www.youtube.com/watch?v=uzrWxGwUhbw&feature=youtu.be and here: https://www.youtube.com/watch?v=DavNuB_e5Ls&feature=youtu.be
Couldn’t find the debate on YouTube yet, but suspect it will show up soon.

Frenchy

Candidates for Deputy Mayor debate is here: https://www.youtube.com/watch?v=1JCVCykMq_k

Old Sailor

If one looks at the Corporation of the Town of Cobourg published 2017 financial statements, audited by KPMG, reference is made to the Investment in Town of Cobourg Holdings Inc. (TCHI) in Note 1(a)(ii) and in Note 4. Per Note 1(a)(ii) the only reporting of TCHI in the Town of Cobourg’s financial statements is its share of the income or loss of TCHI. Per Note 4 there was a profit in TCHI of $469,701 in 2017 (2016 – $821,575). The assets, liabilities, detailed revenues and expenses of TCHI are not reported on the Town’s financial statements and as noted by John Draper do not appear to be reported separately anywhere to the public. Only to its regulator. No doubt KPMG reports on the audit of the consolidated financial statements of TCHI which I believe includes Lakefront Utilities Inc. which distributes electricity and Lakefront Utility Services Inc, which maintains our water systems. We may all be bored by too much financial detail on these regulated companies, other than learning their annual profit or loss. However, what may be of interest to taxpayers is a summary of transactions during the year between TCHI and the Town of Cobourg. Perhaps the Town could… Read more »

Ken Strauss

That might be useful if the mailing were less misleading than the recent colour marina / waterfront propaganda piece distributed at considerable taxpayer expense.

Wally Keeler

Please specify what was “misleading” about the marina/waterfront pamphlet.

Ken Strauss

A few obvious examples:
Numbers such as $12.28M in spending due to boaters are completely unsubstantiated.
The “profit” numbers for the marina ignore the costs of necessary repairs.
There have been numerous posts here regarding the selective use of survey responses to prove one viewpoint.
Why is a costly mailing even required after the most extensive public engagement ever?
Need I continue?

Wally Keeler

Numbers such as $12.28M in spending due to boaters are completely unsubstantiated.”

That, in itself, does not mean “misleading.”

Next.

The “profit” numbers for the marina ignore the costs of necessary repairs

And what are those costs? Possible point re. “misleading” but hardly convincing.

There have been numerous posts here regarding the selective use of survey responses to prove one viewpoint.

This proves absolutely nothing insofar as the waterfront brochure being “misleading“.. Numerous pseudo posts by pseudo names is porous substance.

Why is a costly mailing even required after the most extensive public engagement ever Need I continue?”

Totally irrelevant insofar as alleged “misleading” info on the brochure. I note that you failed to substantiate the allegation that the brochure was misleading. The only thing misleading is your unsubstantiated allegation.

ken strauss

If you don’t find numbers pulled from the posterior and stated as facts to be misleading (polite term for the more accurate one of “lies”) then further discussion is useless. To paraphrase one of your earlier posts on a different subject: “Pffst” or something similar.

Wally Keeler

Totally unsubstantiated post-nutritive disposal substance. You present no proof, yet smear Town officials.

Walter L. Luedtke

Red herring alert.
Trolls bring up subjects unrelated to the topic.
Let me quote Ms. Frenchy on the subject in paraphrase.
‘Trolls who stir the merde should be made to lick the spoon’.

Bryan

Several minor points, Old Sailor, Holdco and all of the Lakefront Group of companies except LUI are unregulated. Only LUI is regulated and that regulation is limited to the electrical distribution services. LUI also provides some unregulated services.
Collins Barrow is HOLDCO’s (and its subs) auditor, not KPMG based on Holdco’s 2014 audited FS.
LUI holds the licence (regulated) to provide electricity distribution services in Cobourg and Colborne.
LUCI provides human resources, administration, financial and operational services to HOLDCO, LUI and other Lakefront Group companies.
LUCI operates the water systems for Cobourg, Colborne and Grafton
Some summary level financial information if provided in Holdco’s Annual Report, As John Draper notes, finding the report is a challenge. The report tends to be more PR oriented and is somewhat “fluffy”

In the Town’s budget process, information of the Town’s “HOLDCO Reserve” is not provided.

Cobourg Person

A few minor corrections:

1. LUI does not provide unregulated services.

2. The correct acronym is LUSI, not LUCI.

3. Below is the link for the 2017 annual report. I wouldn’t claim “finding the report is a challenge”. Further, all annual reports are fluffy, that’s not unique to Holdco.

https://www.lakefrontutilities.on.ca/news/page/2/

ken strauss

Further, all annual reports are fluffy, that’s not unique to Holdco.

The fact that many but not all annual reports are “fluffy” is not a justification for Holdco’s fluff. At least the fluffy Toronto Hydro annual report includes their executive compensation. Why does Lakefront hide their executive compensation? Is it because it is an embarrassment? Does the Board of Directors know?

Cobourg Person

If you want those questions answered then call Lakefront and ask. If they refuse to provide the information then issue a Freedom of Information request.

CTA President Lydia Smith identified Holdco as an issue in a press release dated September 2015. Are you saying that the CTA has done nothing in 3 years to address the concern?

https://www.cobourgtaxpayers.ca/in-the-news/68-announcement

Did a CTA member apply for the vacant LUI Board position in January 2018?

Ken Strauss

Insofar as I understand it, Ontario’s Freedom of Information and Protection of Privacy Act does not apply to Lakefront. Am I wrong? If so under which section of the Act is Lakefront required to provide information?

Bryan

CP:
Per LUI’s 2016 audited financial statement, LUI certainly does provide unregulated services as listed in Note 20: Other Operating Revenue:
Other Operating Revenue: 2016 $377,598 2015 $599,150
Rentals
Miscellaneous
Modified IFRS
Feed-in Tariff Invoicing
Recoverable Work
Sewer Billing
CDM

LUSI LUCI point taken, my bad

John Draper wrote: “It may be possible to obtain their financial reports but they do not make it easy and I have not yet seen a report for 2017”

Bill Thompson

Interesting that only one councillor (running for re-election) is opposed to Holdco providing the financial information to the public owners in addition to being non committal re the marina expansion issue.
If this doesn’t indicate a continuation of the town same old same old governance style I don’t know what will.

Ken Strauss

You give too much credit to Mr. Darling’s non-answers. The question was regarding TCHI (Holdco) rather than the electrical utility. The electrical utility provides almost complete information on the regulated portion of their operations in their OEB filings. I say almost because they provide all union staff contracts but have adamantly refused to divulge their executive compensation unlike virtually all other electrical utilities. The owner’s of Holdco, the residents of Cobourg, are told nothing about the water heater business (recently sold with no public consultation and almost no public disclosure), their legal issues related to patent infringement, etc, etc.

Cobourg Person

To clarify, are you claiming that all utilities provide a list of compensation for their executive staff with salaries above $100,000?

Ken Strauss

Utilities such as Ontario Hydro and Hydro1 publish the salaries of everyone earning over $100K — the Sunshine List. Many private utilities such as Toronto Hydro publish the salaries of their top executives in their annual report. Lakefront publishes the salaries of their union staff regardless of level in their OEB filings but at the last rate increase hearings refused to reveal their executive salaries.

As an aside Mr. Paul’s compensation is available due to a salary survey provided by Veridian in an OEB filing and it is higher than other Cobourg employees such as Mr. Peacock.

Cobourg Person

So not all utilities provide a list of compensation?

http://www.torontohydro.com/sites/corporate/InvestorRelations/FinancialReports/annualReport2017/Pages/Home.aspx

Here is the Toronto Hydro annual report for 2017. I read through their 120 page annual report and I can’t find where they publish the salaries of their top executives. However its 120 pages so I might have missed it.

From what I understand (and I admit I might be wrong), LUI and other municipally owned electricity distributors are not subject to disclosure under the Ontario Public Sector Salary Disclosure Act. This requirement excludes Hydro One, which is consistent with your claim above.

I can understand Lakefront’s position on not disclosing salaries. It’s personal information for an employee and there are no statutory requirements to disclose the information.

In conclusion, your original statement should be clarified that Lakefront Utilities refuses to divulge their executive compensation like all other electrical utilities, excluding Hydro One.

Ken Strauss

Read Karl’s response to Draper’s question. I think that he gets it exactly right when he wrote “By Order MO-3170, the Information and Privacy Commissioner forced North Bay Hydro Holdings Ltd. to release their financial statements. In North Bay’s case, disclosure set a legal precedent Holdco can’t ignore.”

It is curious that Lakefront’s unionized staff salaries are freely provided but not their executive salaries. I suppose that there is a different standard for executive privacy.

Ken Strauss

Sorry. I forgot to answer the other part of your question regarding Toronto Hydro. See http://www.toronto.ca/legdocs/mmis/2017/ex/bgrd/backgroundfile-104784.pdf for the details of their executive compensation.

Cobourg Person

This looks like it was filed as part of the Annual General Meeting and not the Annual report. Regardless, they publish their executive salaries.

Frenchy

“Regardless, they publish their executive salaries.”
So why don’t we?
Um, er, uh… was that an apology?

Cobourg Person

Nope!

Ken Strauss

To put this issue to bed:

If you look at Toronto Hydro’s 2017 annual report (http://www.torontohydro.com/sites/corporate/InvestorRelations/FinancialReports/annualReport2017/Documents/PDFs/AR2017_e-Report.pdf) the bottom of page 72 summarizes the total compensation for their key management team. This isn’t the level of detail that I provided yesterday but the information IS in their annual report contrary to your earlier assertion. They are obviously more forthcoming than Lakefront in their fluffy annual report!

Apology accepted.

Cobourg Person

Why would I apologize? You claimed the salaries for Toronto Hyrdo’s executives were listed in their annual report and they aren’t. They are listed in an AGM document.

Are you going to apologize for incorrectly claiming that “virtually all other electrical utilities” disclose executives salaries?