OPINIONS CONTINUE TO DIFFER AS THE CONVERSATION GROWS OVER THE CIRCUMSTANCES BEHIND THE SALE OF COLLUS, PARTS ONE AND TWO
“If council approves the share of Collus PowerStream this evening, it will be a sad day for the people of Collingwood. This is, in my opinion, not in the best interest of the community and the tax payers.”
Those were the words of Councillor Kevin Lloyd at a special meeting of Collingwood Town Council on Monday October 23, 2017 just prior to a council vote on a motion to sell the Town of Collingwood’s fifty percent share of Collus Powerstream to Edmonton based Epcor.
Councillor Lloyd went on to question the sale process.
“From the very beginning there has been zero public engagement, no consultation to speak of with Collus PowerStream, no consultation whatsoever with our partners, Alectra Utilities, no business analysis on the pros and cons of selling the utility, only scant and poorly prepared consultants reports that weren’t even originally vetted through the senior management of either Collus PowerStream or Alectra until I requested it, at council, that they be reviewed.”
Lloyd stated that he felt the process was not open and transparent, adding had it been, his conclusion may have been different.
“And lastly, if this bylaw is passed I will at some point be requesting a third party inquiry into this process as a whole.”
Lloyd stated the he would not support the sale and that he hoped most of his fellow councillors would arrive at the same conclusion.
Council voted 7-2 and the motion passed. Voting in favour of the motion were Deputy Mayor Brian Saunderson, Councillor Tim Fryer, Councillor Mike Edwards, Councillor Cam Ecclestone, Councillor Kathy Jeffery, Councillor Deb Doherty and Councillor Bob Madigan. Voting against the motion were Mayor Sandra Cooper and Councillor Kevin Lloyd.
Immediately prior to the vote, Mayor Sandra Cooper said the following:
“I do not support the hydro share sale. We talk about private and non-private, being private partners and not … it’s a local distribution company, Collus and PowerStream, both LDC’s, so they were public. It frustrated me in that there was no consultation with such as manufacturing industries. Many small businesses in our community were not reached out to. I do know that in 2012 that there were radio ads, there were public information sessions at the Leisure Time Club at that point. The sale … we did have a partnership … we will be losing control … we were fifty percent owned by our community and it’s like losing control with a sale not unlike waterfront property or an asset. It is never coming back to municipal ownership once that is gone.
It’s a short term gain in my opinion and therefore I just can’t support the bylaw as presented this evening. I want to also recognize the number of hours, staff’s hours, council’s hours, countless hours that have gone in this, and many, many meetings that we’ve had in discussions … so I want to recognize everyone for not making a frivolous decision. Everyone is making a decision based on their information and moving forward.”
Just prior to the mayor’s comments, Deputy Mayor Brian Saunderson had this to say:
“When this council came on board in 2015 we undertook a number of consultant’s reviews and we found there were a number of difficult issues that could be improved and streamlined for the benefit of our community both in terms of services delivered and the costs of those services being delivered. When I hear Councillor Lloyd’s comments that this whole process has been done behind closed doors and is not taking place in the public eye … that process was set in motion five years ago when this town sold the first half of Collus Solutions, and so we are not able, we are in a shareholder agreement with our partner and we have to abide by that agreement and the terms of that agreement in our restrictions under that agreement in fairness to our partner and how we conduct our business and looking out for the interests of our ratepayers and our taxpayers.
We have done that process and we done it, I think, on a very thorough and evidence based way, which I think you will see in the outcome, in the presentation we have today from our energy lawyer. There has been input from our municipal lawyers and we have in my opinion exhausted all possibilities. What we are setting in motion now with today’s decision is another series of events that are set out in the unanimous shareholder’s agreement. So we are abiding by that agreement.
I think the outcome of that process is in the best interest of our community and that includes our ratepayers, our taxpayers, the employees and our partner.
At the end of the day this is a business. And while it was wholly a municipal business at one time now it’s a fifty percent private and fifty percent public business, and that puts us in a very difficult position with a foot in two doors basically.
Over the five years that the partnership agreement has been in place we have only received a dividend in two of those years. Those dividends were roughly five percent in those given years, but when you take those out over a five year term it’s about two-point-one percent. If we just deposited the money in the bank right now you get one-point-six percent. So the level of return has not really made this a profitable investment from that perspective and that was one of the key objectives in moving forward as I understand it from what I’ve seen, because prior to that Collus didn’t pay out any dividends, they reinvested them to try to deliver the best service at the best cost to our community.
So in moving forward we are trying to streamline the costs to our community, get the best value for our ratepayers, and I appreciate that harvesting an asset, selling an important asset like this … you can only do it once so what happens with those proceeds is of key consideration for everyone here.
Last time, those proceeds, eight million dollars … that’s what we got for the shares last time … eight million dollars … so when you here the terms of the agreement moving forward you must use that as your benchmark starting place.”
Appearing on “The Wise Guys,” a weekly radio show on 97.7 The Beach, former Collingwood Mayor Chris Carrier stated that the announced final selling price of 11.8 million dollars for the second fifty percent of Collus PowerStream to Epcor represents a 48.6% increase in five years.
“It really begs the question, were we underpriced at 8 million or were we over-sold this time? I doubt that we were over-sold. Gosh I wish that stock had been public. It might have been nice to purchase it.”
THE DISCUSSION CONTINUES
An article appeared on November 30th on Simcoe.com (Collingwood Connection) where writer John Edwards wrote that Councillor Kevin Lloyd felt that the public meeting held at the Collingwood Library on Thursday November 23rd with Mayor Cooper, Deputy Mayor Saunderson and Epcor representatives in attendance was long overdue. The article stated Councillor Lloyd was “still weighing whether he plans to call for a review but believes the process to reach a decision was flawed.”
Carrier said Councillor Lloyd’s consideration of a review of the sale of the Town of Collingwood’s fifty percent share of Collus PowerStream to Epcor is a good idea.
“Well if we’re going to open that one, let’s open the previous one and open up all of the documentation to prove that eight million dollar price that we sold five years ago was the real price and did we undersell it, because I think it was undersold and the decision lies with that previous council for having sold from the public an asset that should have been kept in the public hands.”
Trent Gow is an Economic and Public Policy Advisor and co-host of “The Wise Guys.” He continues to scratch his head over the decision made by the previous Town of Collingwood council to sell the first fifty percent of Collus.
“Let me make two points. One is that I absolutely think that the Collingwood Council in 2012 left several million … it could be as much as five or six million dollars on the table. I can’t think in my whole policy background of a crazier decision than the one that was made to sell exactly fifty percent of Collus. It’s just bizarre. It almost suggests WHY.”
… and the discussion on the streets, in the coffee shops, businesses, offices and residences of Collingwood continues.
CLICK HERE to visit the PODCASTS – WISE GUYS audio on 97.7 The Beach
CLICK HERE to view the Simcoe.com article referenced above
CLICK HERE to visit the Hydro Sale Section of the Town of Collingwood web site
CLICK HERE to watch the October 23, 2017 Special Council Meeting on Rogers Television Collingwood
Town of Collingwood Press Release – October 23, 2017
Town announces sale of hydro shares
Collingwood, ON [23 October 2017] – Collingwood Council has agreed to sell its 50% stake in Collus PowerStream, the local distribution company, owned by the Town of Collingwood and Alectra (formerly PowerStream).
Through the competitive RFP process, it was made evident that owning just 50% of the utility was not appealing for any potential purchasers, and significantly limited the municipality’s options to divest itself of the remaining shares. In January of 2017, Council announced that it was pursuing hydro share sale discussions with EPCOR.
The Unanimous Shareholders Agreement (USA) entered into by the Town and Alectra in 2012 contains an exit provision, which requires the Town to present a buy/sell option to Alectra for the sale of the Town’s shares.
If Alectra opts to buy the Town’s shares at the same price as EPCOR has offered, Alectra will become the sole owner of the utility. If Alectra opts to sell its shares, EPCOR will become the sole owner of the utility.
Under the USA, Alectra must advise the Town within 20 days whether they wish to sell their shares, or purchase the Town’s shares. After a decision is made, the parties must make an application to the Ontario Energy Board to approve the transaction. This process could take anywhere from three months up to one year.
In both options presented, the Town would receive between $12.5M and $13M from the sale of their 50% shares. In 2012, the Town received $8M for 50% of its Collus PowerStream shares. The municipality is confident that the purchase price and terms established by the Town maximizes the value of the shares, and is in the best interests of Collingwood, its taxpayers and ratepayers. Staff will provide Council with a report on potential investments for these funds in the near future.
The Town will hold a Public Information Session to provide further details of the agreement, once Alectra’s decision is known. Residents are assured that Collus PowerStream’s electricity distribution rates are set, and will continue to be set by the Ontario Energy Board (OEB).
Other terms of the sale include a 25-year lease of the Collus PowerStream property and operations centre from the Town, job and location guarantees for Collus PowerStream employees, and a contribution of $150,000 towards the Waterfront Master Plan, one of the community’s biggest priorities, as identified in the Community Based Strategic Plan.
To view the full presentation given at the Special Council meeting by Mark Rodger, the municipality’s legal counsel at Borden Ladner Gervais LLP, please visit our website at www.collingwood.ca/Hydro.