Council votes on 'disposition of Tillsonburg Hydro Inc'
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At its regular council meeting Monday night, Tillsonburg Council voted against a motion deferred from Feb. 27 to examine the disposition of Tillsonburg Hydro Inc.
And with the vote, council handed the ball back to THI.
"We will make it known that council, as always, will listen to what Tillsonburg Hydro wishes to bring back to us," said Mayor Dave Beres.
Earlier in the meeting, CAO David Calder provided a recap of recent council decisions regarding THI, which were initiated by a recommendation brought forward from the THI board resulting in a Feb. 27 resolution on the 'disposition process' of THI. The resolution was deferred, on a motion by Councillor Marty Klein, until a public information meeting could be held, which resulted in a May 14 meeting attended by several hundred people at the Tillsonburg Community Centre.
The deferred resolution contained four basic items – that council approve the disposition of Tillsonburg Hydro Inc. through a Request for Proposal (RFP) process... that council directly oversee the disposition of THI... that the four independent members of the THI's board of directors act as a non-voting resource group to council during the process... and that council hire experts in the area of legal, financial and communications 'to facilitate the disposition of Tillsonburg Hydro Inc.'
The deferred motion, said Calder, could be adopted, defeated, amended or deferred again.
Councillor Mel Getty took advantage of the opportunity Monday night to present an amendment, which stressed the need to examine all the options, and each member of council was given the opportunity to share their views before voting on Getty's amendment.
"After having talked to many of the people involved, including former and current board members, I believe that changes need to be considered," said Councillor Brian Stephenson. "Almost everyone I talked to agreed that changes need to be made. I'm sure that when Hydro was formed by the council of the day, the people involved were unsure how it would work out, but knew that changes could be made going forward.
"I think we're at that point," Stephenson continued, agreeing with Getty's suggested amendment. "Changes need to be made to Tillsonburg Hydro. I think almost everybody agrees with that. The current Hydro board has spent many months getting information together and have come to the conclusion that it's time to take a look at making those changes. As a councillor, I believe that changes need to be made to the way we use this asset."
Councillor Brenda Carroll said she had a problem with a part of the motion, specifically the RFP process, which she felt was premature considering the need for finding proper staff.
"I think that we need to kill the motion, and continue on. Let's get some people in here that have the expertise that we need. It's time, it's due, and let's get on with it."
"I am going to vote against the amendment," said Councillor Klein. "When Mr. (David) Calder brought the report to us on the 27th of February... there were a number of comments about why did that report come to us in the fashion that it did? The council of seven people at the time directed him to bring that to us, so all of us knew it was coming. What we didn't know was the extent of which the reaction was going to be from the community."
So, on that night, Klein moved a motion which passed unanimously to defer any decision before having a public information meeting. That led to the May 14th meeting at the Tillsonburg Community Centre.
"Between the 27th of February and the 14th of May, all of us I believe were inundated with comments from the public. Emails, social media, phone calls. And to be quite honest, I spoke to very few people who were in favour of going down that road of an RFP to look at disposition of the company."
Klein said it was clear the mood of the community at the public information meeting, with an estimated 300-350 people in the Lions Auditorium, was not in favour of disposing of Tillsonburg Hydro.
"They're satisfied with the service levels, they're happy that local people that have the jobs, that are providing service. One of the presenters, he's here in the room tonight, pointed out that our electrical rates for residential are among the lowest in the province, and our electrical rates for higher usage, commercial and industrial, are also amongst the lowest in the province."
Klein agreed with Stephenson, there needs to be change, but he said the change has to be managed.
"I don't think there's a person on the Hydro board that doesn't think there's room and opportunity for change."
And one of the first items on the agenda, he said, would be whether or not THI wants to continue to share a general manager with the Town of Tillsonburg. With Steve Lund leaving to work for the County of Huron, Klein said it gives them an opportunity to ask whether the virtual model, as it applies to senior management, still makes sense the way it made sense 11-12 years ago.
"My view on that is for us to hire an experienced competent person, that is a civil engineer, that understands operations, that understands public works, and has experience, confidence and a proven track record in running a hydro company, from within is going to be very, very difficult. So I would say that the time has come for THI to look at bringing in a person who is familiar with the industry, that's shown they have been successful elsewhere, and start going down that road of change."
If they hire the right person, said Klein, that person would have knowledge of the best practice going on in the province when it comes to operations, engineering, administration and financial management.
"The last comment I would make, presuming that we're going to be in the hydro business, is that I believe it's time the meetings of Tillsonburg Hydro become open to the public."
As a private company, that is not required, he noted, although the annual meeting is public and the financial statements are public, but the month to month work of the board is not open to the public.
"I think it's time that we do that, and quite frankly had it been open to the public over the last year when all this discussion was taking place at Tillsonburg Hydro by the board, the community would have known about it and there would not have been the reaction that there was on the 27th of February.
"So I'm going to vote against the amendment," Klein summed up, "and when it goes back to the original motion, I'm going to vote against that motion. For me, it's very, very clear what the shareholders want – and we represent you. We're not talking about a zone change, we're not talking about a minor variance, we're talking about selling the town's single biggest asset. This is probably the biggest deal that we've had since downtown redevelopment in the late 1970s. I will be voting to maintain ownership in Tillsonburg Hydro."
Deputy Mayor Mark Renaud noted the decision to examine the disposition of THI was not initiated because either the hydro company or town was in bad financial shape. Nor was is it being driven by the province, he added. Having recently met with Premier Kathleen Wynne, PC leader Tim Hudak and NDP leader Andrea Horwath, Renaud asked each of the party leaders directly, 'Will you mandate the merger, amalgamation or outright purchase of the electric companies of Ontario?'
"All three of them said 'no.'
"For many years, through the time that I was chair of the board for six years," said Renaud, "it took us a long time to right the ship and get it going in the right direction. Last year we made the most amount of money that Tillsonburg Hydro ever made. Period. And that is a tremendous accomplishment. And that's not thanks to me, that's thanks to the men and women out there – the Customer Service Centre, our linesmen, our superintendent, our general manager..."
Because of some questions regarding hydro, said Renaud, some people 'jumped ship' resulting in a need for council to address the hydro situation.
"At this juncture, at this point in time, my best educated decision is... why on earth would we move forward with the disposition of the company when we have staffing issues that need to be resolved very quickly? We have a wonderful company in Tillsonburg Hydro. We had Smart Metres before they were mandated by the Ministry of Energy, LED lighting – we tested LED lighting seven years ago. There are things we did because it was the right thing to do."
Renaud did acknowledge the need for a full-time general manager, admitting the company needs to make some changes to remain relevant.
"At some point, when it becomes stabilized, I think we should perhaps talk to people like Toronto Hydro," he said, nodding toward a three-person delegation who earlier that evening made a presentation to council. "Are there things we can do collaboratively? But I think, right now, why would we get rid of something that is working well? Does it need to be better? Absolutely. It makes money, it creates employment, we have one of the best grids there is. Period. We can deal with these issues moving forward – I will not support the original resolution."
The purpose of the amendment, said Councillor Mel Getty, was to reassure the public that THI had not been sold – that no backroom deals had been made.
"We need to examine the options," said Getty. "Even some of the public who were at the public meeting that were against selling agreed, you need to look at options. This is what my amended resolution is all about. It is to continue the process looking at all the options. If we can do that without an RFP to get the information from people, the RFP should not be in the resolution, and I agree with that."
Town Clerk Donna Wilson was asked if an amendment could be made to the amendment, and Wilson agreed it could.
"Then with Councillor Stephenson's suggestion, I will amend the amended motion," said Getty, adding with a smile, "Bear with me folks, bear with me."
While Getty worked on an amendment, Councillor Chrissy Rosehart shared her views.
"I'm sitting here listening to everybody, trying to understand all these motions... do we need to look at the business, yes we need to look at the business."
Rosehart asked if Hydro is the decision-makers that come to council, or is council the decision-maker that goes to Hydro.
"I'm trying to understand, do they take orders from us or do we take orders from them? Who comes back with which way we're going? I just want clarification. Is Hydro the one that's going to come back to us and say 'we're going to look at it' and 'we're going to do better with it' and 'we're going to hire people to run it better'? Or does council go to Hydro and say 'this is what we want you to do.'"
CAO David Calder explained, "If council decides not to dispose of the asset... you can then request the board of directors to look at the model, the organization structure, you can direct me to ask them that. But you've got to deal with this issue first. The issue that is before you now is one that your board of directors originally brought to you, and we haven't resolved it yet."
With amendments and resulting questions arising from procedure, Klein said he never thought Monday's meeting would be so confusing.
"But one thing I'm not confused about is the people who live here don't want us to sell the hydro company," said Klein. "That's a pretty fair statement. It's pretty clear in my mind what the people want."
"Councillor Getty, would you read the amendment to the amended resolution please," said Mayor Dave Beres, chairing the meeting.
"I would if I had done it, but I haven't done it yet," Getty replied.
"The reason is, to get this information, I understand you have to go through an RFP process. So here's the dilemma. I think it's abundantly clear the issue of selling is a question mark by some of the citizens. I won't say the majority of them, I won't say all of them, but certainly a portion of them.
"Status quo, the board of directors said, is no longer viable," said Getty. "That was backed up by consultant reports. We have the memorandum of a Master Service agreement... but to fully explore all the options, the staff has to have the ability to put out an RFP to get the information."
The average net profit for THI over the past five years, said Getty, citing information available at the public information meeting and online, was $250,000 each year.
"It was also said we spend $75 a customer on infrastructure, which is very, very low. Which indicates to me that eventually we're going to get burnt because we're not spending enough on capital infrastructure to keep everything up to par and running without issues."
Increasing infrastructure investment takes away from profit, he noted.
"It is a profitable company, but I don't think it's that profitable that we can ride it out the way it is right now."
The RFP clause would remain in the amendment, he said, because he felt that would be the only way staff could get information that council and the public need about available options.
"The best options for today and for the future of the LDC here in Tillsonburg. And with that, when it comes back, the idea of all this is that we have a pretty good sense of the dollars, we have a pretty good sense of staff requirements, and we can made an informed decision based on actual facts about which way this council should do it."
The Town of Tillsonburg and every citizen in it, said Getty, is a shareholder, and the responsibility for making that decision rests with council.
"That decision, on my part, will be made based on all available information that we have, and look at all factors of the outcome and rippling affect that decision is going to make. That's the only thing I can say about my decision, because I don't know what that's going to be until I get that information.
"You may think I'm pushing to dispose of it. I'm not. I'm pushing to get the best that we can do in THI, by exploring all the options thoroughly. That's what I want out of this. So when I make my decision, it will be the best decision for citizens of Tillsonburg now and for the future – with all the available information."
Getty expressed his respect for the founders of THI 15 years ago, and for the linesmen and THI staff who do their work quickly, efficiently, and most important, safely.
"They're very, very good, they are trained well. The counter staff are polite. We have issues with billing – every utility has issues with billing now and again, that's just the way of the beast.
"But I also look at the finances. And all that was made public at the public meeting, if you could navigate through our 'easy-peasy' website... we held nothing back, when it came to the finances, to the citizens of Tillsonburg. They had everything that we had, and staff did a great job doing that."
Getty highlighted a couple financial items.
"We say that we are efficient, we say we are the best. We say all this, and we are a lot of it. Efficient we are not, when you look at other LDCs our size. Out of 43, we were ranked 42 for efficiency. That isn't a report card that I'm happy with being on the THI board of directors. It's not a report card I'm happy with being a citizen of Tillsonburg. 42nd out 43 for efficiency, I think we can do better. Our costs were high compared to others – we can do better. I don't think we can do better in the system we have right now. It's been there for 15 years, and the industry has become more complex since it started, and THI's the same."
Getty again stressed status quo is not suitable, and noted the board of directors agreed 100 per cent that it was not suitable.
"It's time to move on. Moving on could be keeping it and revamping it, and I'm all for that if financially that is the thing to do."
Hiring a couple people that know the industry, for example a general manager, he said, would quickly eat up the $250,000 profit.
"So if we eat up that profit, how many years to do we go not making any money? How many years does it take for the people we hire to get it turned around and more profitable again? How long before we surpass the $250,000 net profit that we're making now? Is that three years, five years, 10 years? I don't know because I don't have the information," Getty summed up. "We need more information."
In a recorded vote, Getty's amendment was defeated 5-2, with Stephenson voting with Getty. The original Feb. 27 motion was also defeated 6-1.