Published by Lakefront Utilities, this is primarily a report on operations with minimal Financial information. Audited financial statements are available but are not on the Utilities web site but instead are on the Town’s web site – see links below. This is no doubt appropriate since the Town of Cobourg is the majority shareholder but as recently as the last Municipal election, many were not aware that this information was available. The Annual report does include a single page of financial numbers and this would be sufficient for most. But the full statements do list the full “profit” and the “dividend” paid out – to Cobourg. The profit not used for the dividend appears to be used to add to Lakefront’s cash position – the accumulated retained earnings (cash in the bank?) at the end of 2018 is listed as $5,153,485. Nice reserve but what is it planned to be used for?
The gross revenue, profit, dividends paid and net retained earnings for the last several years are in the following table:
- “Revenue” is for distribution – the actual electricity cost is a lot more but is passed through. (Water revenue is separate).
- Not all applicable financial entries are shown. For details see full financial Statements – links below.
- Some numbers (other than dividends) were changed in subsequent statements – this is explained in the full financial statements
As a regulated Utility, their rates and therefore profit are determined by the Ontario Energy Board so the net income is effectively set by them. I’ll leave it to others to comment on the accumulated retained earnings although it would be good if there was an acceptable explanation. (Photo is of Derek Paul at February Council meeting talking about an increase in water rates)
Most of the report covers non-financial issues starting with structure. There are actually two operating companies both owned by Holdco (official name: “Town Of Cobourg Holdings Inc.”); one share is owned by Cramahe – the rest by Cobourg:
- Lakefront Utilities Inc. (LUI) – regulated so prices are managed. Manages expenditures.
- Lakefront Utility Services Inc. (LUSI) – not regulated and run like a private company. Provides people to operate LUI. Separately, LUSI also operates the water system as well as offering fibre-optic high-speed and dedicated data systems.
Since the Water system is operated separately, water finances are separate. Water revenue was $5M and net income $982K. But how that contributes to the overall finances of Holdco is not spelled out. Since Holdco is the holding company, the numbers in the table above include profit from water, fibre-optic and other services but how they fit in is not detailed – or if it is, it’s not clear to me.
Another anomaly is that the Report shows $507,500 in “Interest” paid to Cobourg – maybe a debenture payment but how it relates to the “dividend” (if at all) is not spelled out.
There is no information at all on the fibre-optic Internet business run by LUSI nor on the investment in Solar Panels at Venture 13 (Explanation of Solar panel “investment” here). Are they making or losing money?
The report has a lot of information on reliability and customer satisfaction (both quite good) and is worth reading (link below). One improvement over last year is an app for your phone that is good if you have a power outage (as I found out). I was also pleased with the quick response and explanation I received when I reported the outage on the app – apparently squirrels ate some transformer wire.
- Holdco – 2018 Annual Report
- Lakefront Utilities Inc App
- Holdco – Should their Finances be Public? – News item discussing public availability of Holdco finances with 2018 election candidates – 25 September 2018
- Financial Statements of Town (2015, 2016, 2017) and Holdco (2015, 2016, 2017, 2018) – can be found on Town’s web site under Home/Town Hall/Budget and Finance/Financial Statements
More – 9 July 2019
Bryan Lambert has provided an extensive comment (2 pages) on the above. Thanks Bryan.