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The second annual report by Holdco was released June 28, 2017 – it covers 2016.  Holdco is the holding company for Lakefront Utilities Inc. (LUI) and Lakefront Utility Services Inc. (LUSI) .  All the work is done by LUSI – they manage Electricity assets owned by LUI as well as provide water and fibre-optic services.  Although the report is for Holdco, only electricity services are included in the report perhaps because they do not own the water assets.  This report is the only official report released that includes any financial information but Holdco is often referenced in Council as a source of a dividend that can be used for off-budget items.  The Holdco report does not mention how much dividend is actually paid to the Town – in one place it says “Dividend and Interest:  $507,500” yet in another place it says net profit is $821,575.  It’s a report aimed at customers, not anyone interested in analyzing how they are doing financially.

Although it is stated that LUSI “provides services to Municipalities related to the design, operation and maintenance of water systems and high speed dedicated data systems”, the costs associated with managing water systems are not separated out.  Nor are the costs associated with fibre-optics (data systems).  One might conclude that the electricity supply business is subsidizing the water and fibre-optic businesses or maybe the revenues are separate so there is no report on these businesses.  The report does not address this issue so is confusing.

The “Letter to Customers” by President Derek Paul and Mayor Gil Brocanier says that “we’re being more transparent in response to our customers becoming more invested and proactive in their local utility” but that seems to not include financial results – just operational results of the electricity business.

The report makes it clear that LUSI is only responsible for the expenses associated with distribution (14%) and not the majority of the cost which is power generation (62%).  However, they do generate the full electricity bill so the full revenue passes through their books and a markup on the full amount pays for distribution costs.  But the Income Statement on page 23 of their report is lacking details.

lui outagesThe operational results are in fact quite good – see the outages graph at right.  The report also talks about cost efficiencies, billing accuracy, service performance, safety and absenteeism and does include some financial highlights but nothing that could be called full financial reports with the details that shareholders are usually given (see link to Trans Alta below).  But given that LUSI is only responsible for 14% of the total, their performance has a relatively small impact on the overall bill.

Note that the Ontario Energy Board  (OEB) keeps utilities honest and manages rates.  In their ruling for 2017, the OEB Rate Order for Lakefront said “it is estimated that the total monthly bill for a typical residential customer with an average monthly consumption of 750 kWh will increase by 0.61% or $0.88.”  Not bad but it would be good to have more transparency on the books.

More - July 7, 2017

The report by the Town on its 2016 Financial results shows that Holdco paid $507,500 interest to the Town on the Town's loan of $7M to Holdco.  There was also a payment to the Town of a dividend of $223,000.  This varies each year - in 2015 it was $340,400 - and is the pot often used to pay for "off-budget" items.

The same report shows that services for Waterworks were "contracted services" at $2,704,909 - that is, this amount was paid to HOLDCO to provide management of the water services for the Town.  This amount is not discussed in the HOLDCO report.




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