Holdco Releases Annual Report for 2018

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 Net Income
Dividend Retained
2014 $4,579,747 $684,725 $385,100 $3,054,418
2015 $4,559,344 $1,635,924 $340,400 $4,362,967
2016 $4,742,695 $821,575 $223,000 $4,808,400
2017 $4,549,480 $469,701 $200,000 $4,711,416
2018 $4,728,299 $592,069 $150,000 $5,153,485


  • “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
Dereck Paul
Dereck Paul

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.


More – 9 July 2019

Bryan Lambert has provided an extensive comment (2 pages) on the above.  Thanks Bryan.

Comment re the above article

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18 July 2019 9:55 am

Let’s grill out Mayor for all the details we as citizens want. If we get no reply…vote him out next election.

9 July 2019 6:41 pm

Do my comments (more above) help with the questions you asked?

Reply to  Bryan
9 July 2019 7:51 pm

Clear as mud to me Bryan. Setting up a few arms-length entities to confuse, diffuse and bemuse the situation (public?). Nobody knows who to question and when you try, get told “not my job, ask someone else”.
What fiber optic system? Who’s on it, where is it? How much does it cost, how much revenue does it generate?
It’s got me wondering which walnut shell that pea is under.

Reply to  Frenchy
9 July 2019 8:16 pm

“Nobody knows who to question”

Seriously? The CEO is listed above and the Board members are listed in the annual report.

Reply to  CobourgPerson
10 July 2019 12:28 am

The CEO or a board member is going to take your or my call and answer pointed questions?
What planet do you live on?

Reply to  Frenchy
10 July 2019 6:30 am

So you have tried calling and your call is refused or you haven’t bothered calling and your post is an assumption.

I live in a small community with a local utility. If the CEO or Board member refused to take my call or answer a reasonable question then I would contact a member of council. I wouldn’t post on this blog an assumption about an organization.

Miriam Mutton
Reply to  CobourgPerson
10 July 2019 10:00 am

Frenchy, Cobourg Person … if I may contribute to this conversation. In my experience I find that staff at our utility company(ies) do respond to questions. However, I have not asked the big questions some posters here are suggesting be asked of senior management and directors. I too support more transparency in matter of public reporting of information. Hard to say why an official may be prompt in replying to one inquiry and not another. For example, when I wrote individually to the three Council members who their changed their minds a few weeks ago about a Council pay raise to ask why … one Councillor responded the same day. Another, a few days later. Both, frank in their reply. I did not receive a reply from the third, the Mayor who is usually very prompt in responding to questions, even after a second request.

Reply to  Frenchy
11 July 2019 8:50 am

In my opinion,and from experience, I was a Cobourg Networks Inc. Director for a couple of years, the unit is not interested in the ‘last mile’ of any fibre operation. They want to string wires to large customers and do little else. Discussions about cooperation with local ISPs, to supply the last mile and ‘back-office’, went nowhere when I was involved and all of it was driven by the inaction of a previous CAO. This CAO, who studied under the last one, appears to be of the same mould – derive income from a minimal investment in infrastructure and collect the fees.

John Draper
Reply to  Bryan
9 July 2019 8:21 pm

My questions were more in line with Frenchy’s and others, There’s a lot still omitted, the report assumes the public cares about operations more than money but I would think the people most likely to read it are more interested in the financial side and why are there profits and want to know about the unreported items like the fibre-optic service, the solar panels on the Venture 13 roof and why is Water reported here if it’s separate.
Bryan, I don’t dispute the info you’ve provided and I recommend people read your document if they want to know more – even if the full story is still not complete.
But to answer another question – showing the salaries of CEOs etc for companies is not a legal requirement but it is for public (that is, government) employees if they are paid more than $100K. But most big public companies do show the salaries of their top level staff.

Reply to  John Draper
9 July 2019 8:51 pm

John, There is a continuing discussion about executive compensation disclosure for the HOLDCO group, I think the executive and senior manager’s compensation should be disclosed (FS notes & sunshine list).
Prior to 2000, HOLDCO/LUI/LUSI didn’t exist. All of the people were Town employees (Cobourg Public Utilities Commission) and subject to sunshine list disclosure. Some aspects of the CPUC like the OMERS pension was “grandfathered” to LUSI. So why not “grandfather” the compensation disclosure requirement as well.The claim is that it is a privacy issue, but it wasn’t an issue for the CPUC and Town.
Town Council could easily direct Holdco/LUI/LUSI to do it.

Walter Luedtke
8 July 2019 9:48 am

“Lakefront participated in a customer satisfaction survey with 12 other utilities. This survey is a required part of
an LDC’s Balanced Scorecard and other reporting and regulatory requirements for the Ontario Energy Board
The survey was comprised of 401 randomly selected interviews of Lakefront Utilities customers. Lakefront
Utilities’ 2018 Customer Satisfaction Index Score is 80.7%.”
Yeah, but what do the customers know anyway?
So much more fun to talk about ‘stealth tax”, slush fund and trust.
Happens every year.

Reply to  Walter Luedtke
8 July 2019 10:14 am

Walter, you’ve missed the point entirely.
I’m surprised they score as low as 80.7%. From my own personal experience, I would rate them higher than that. As a utility they do a great job.

The discussion is about why there are certain undisclosed salaries and what to do with the dividend paid to the town. Who gets to decide where that money goes and how is that determined?
Ben suggests just bring that money “into the bottom line as revenue and use it to reduce taxes.” Have council debate the merits of any project, then vote and fund it accordingly as they do with all other expenditures.
The same idea could (should?) be applied to all other revenues streams such as the Northam Fund and Police Service million dollar profits.

Walter Luedtke
Reply to  Frenchy
8 July 2019 10:30 am

Yeah well, looking at the names on the Board of Directors, these are well-known and respected Cobourg people, who know a thing or two about corporate governance.
But if you and yours suspect them of shady doings behind closed doors, that’s your privilege of which you folks make ample use.
Over and over again.

Reply to  Walter Luedtke
8 July 2019 11:01 am

You’re still missing it Walter. You are servicing your own agenda here and bring it up over and over again.
I’m not accusing anyone of shady doings. I’m questioning the need for secrecy and the openness and accountability of public funds spent.
And, who is the “yours” in “you and yours” and who is/are “you folks”?

Ken Strauss
Reply to  Walter Luedtke
8 July 2019 11:08 am

The only insinuation of “shady doings” is yours.
The board members are paid from our electricity and water charges. Shouldn’t Cobourg residents know how much they receive? Others in similar positions are much more forthcoming.

Fact Checker
Reply to  Walter Luedtke
9 July 2019 6:57 pm

Walter, over the past 19 years, the total combined LUI interest and Holdco dividend is in the order of $16M. If LUI and LUSI lowered their rates, Cobergians could decide how best to spend their money rather than paying hidden “stealth taxes” imbeded in the utility fees.

8 July 2019 8:52 am

My favourite quote on the subject:
“If council wants to fund a project, they need to make the value clear to the taxpayers, justify the tax support and stop hiding behind the public utility.”
Mrs. Anonymous, 17 October 201

8 July 2019 6:23 am

“Lakefront has some of the cheapest rates in the province and the profits they do make go back until a very valuable slush fund for the town. It is a win-win situation. Cobourg is very fortunate.” – Durka

A valuable slush fund controlled by Council and unaccountable to the taxpayers. “Play-money” The amount of which is rarely disclosed in accounting forms.

The time has come, if Council wishes to maintain the status quo, to establish controls an policies for the slush fund/play money. We need a community Board established to administer a “community trust” that would dispense these funds into the community. If we are not prepared to do that just bring them into the bottom line as revenue and use it to reduce taxes.

Either way it should be money used for the Council’s whims!

Reply to  ben
8 July 2019 8:08 am

Ben, I was going to give you a thumbs up right up until your last line. Did you mean to say “it should NOT be money used for the Council’s whims!”?

Reply to  Frenchy
11 July 2019 8:55 am

Yeo Frenchy my bad it definitely should be NOT.

Ken Strauss
7 July 2019 9:44 am

Some may think that “profits” and “dividends” are a good thing. The customers of Lakefront are almost all residents of Cobourg so any “profit” means that Cobourg residents are overcharged for their electricity and water. The profit gives local politicians a slush fund to pay for their favoured goodies without having to admit that the money actually comes from a stealth tax.

The financial statements of most companies list the amounts paid to their executives and boards. I don’t see such details in the published statements of Holdco. Why? How much does Mr. Paul receive? How much are the board members paid?

Reply to  Ken Strauss
7 July 2019 10:55 am

Ah yes Ken but the beauty is these profits stay in the Town of Cobourg. Do you think Port Hope sees a lick of money that Veridian profits off their town residents? Nope. They are a private company with priorities elsewhere.

Lakefront has some of the cheapest rates in the province and the profits they do make go back until a very valuable slush fund for the town. It is a win-win situation. Cobourg is very fortunate.


Reply to  Ken Strauss
7 July 2019 11:44 am

I’m not a privacy expert but I expect disclosing staff salaries when you aren’t required would be an issue.

Almost Old Codger
Reply to  Ken Strauss
7 July 2019 11:50 am

If Holdco was a co-op the “profits” could be called “surplus revenue” and returned to the users. But I doubt if co-ops are allowed to run hydro companies in Ontario. The next best thing is for them to be community owned, this ways the users get a reasonable hydro charge, and excess revenues get to be used by the town.

Ken, perhaps you believe that only corporations should own public assets, and that way Holdco could be like Highway 407 and charge outlandish rates, and all the profits go to big foreign and Canadian corporations.

It is true that the profits should be put into Cobourg’s consolidated revenue, and the use of them be voted for by council, but the result would be approximately the same as at present, and the “profits” would still go to the benefit of Cobourg residents.

Ken Strauss
Reply to  Almost Old Codger
7 July 2019 2:00 pm

I certainly agree that keeping the profits in town is preferable to sending them away. My objection is that the “Holdco dividend” is often treated as found money to be squandered frivolously rather than a portion of the taxes collected by the town.

I am certainly not an expert on privacy either but it seems strange that the salary for our CAO, our Mayor, our firemen, our policemen, the workers at Lakefront and the heads of Toronto Hydro, Ontario Hydro, Enbridge, IBM and most other companies are routinely divulged yet we don’t know how much Mr. Paul is paid. Why the difference? Is his salary embarrassingly low or embarrassingly high or…?

Reply to  Ken Strauss
7 July 2019 2:20 pm

I think that is the perfect use for it. In many ways it is found money. Many municipalities sold off their utilities and don’t have such a revenue stream. Cobourg is in a position to reap the benefits and have a little fun money, what’s wrong with that?

Ken Strauss
Reply to  Durka
7 July 2019 3:36 pm

Deceiving the residents? It is definitely not “found money”. Every cent came from the residents without their permission (and largely without their understanding)! Without local fiscal responsibility Cobourg will be in the same financial state as Ontario.

Reply to  Ken Strauss
7 July 2019 4:22 pm

Here’s an off-the-wall idea: You (and the CTA) meet with Lakefront management and ask your questions/concerns and then report on the response. Maybe you will actually learn something.

Ken Strauss
Reply to  CobourgPerson
7 July 2019 4:59 pm

A number of relevant questions were asked at the OEB hearings and Lakefront declined to answer. Questions such as executive compensation should be answered in public rather than privately. What is the rationale for publicly revealing the salaries of unionized workers yet hiding those of the executives?

Reply to  Ken Strauss
7 July 2019 5:19 pm

I assume it’s because of a privacy concern. If I wanted to verify my assumption I would as Lakefront’s management. Can the CTA not ask the questions privately and then release the answers publicly?

ken strauss
Reply to  CobourgPerson
7 July 2019 6:10 pm

Surely the easiest path for everyone would be to simply include the information in the annual report.