Wellington North council approved Wellington North Power’s (WNP) request to set up a holding company that would allow the corporation to seek new revenue while still benefitting ratepayers.
The utility company, which is owned by the township, received permission to implement a holding company in August.
On Nov. 20 WNP presented the next steps for the township to set up the holding company.
Mayor Andy Lennox, also chair of the WNP board, explained the corporation has taken on debt in recent years to fund “critical infrastructure upgrades.”
This has increased rates, so Lennox said WNP is trying to find a solution to repay that debt without unreasonable rate increases.
“The board has had significant discussions about how do we keep rates modest, continue to deliver excellent service to our community,” he said.
“We say this is the preferred alternative to try to do that and look for opportunities where we can gain more efficiencies from our current assets through utilizing them more fully.”
Lennox said WNP was compared to other local utilities companies in key parameters.
“Of the nine that we are compared to, we’re number one in terms of service quality. We’re not doing nearly as well in some of the other numbers,” he said.
Councillor Dan Yake, who also sits on the WNP board, said a lot of work has gone into the process.
“We’re certainly not rushing into it,” he said.
“There’s nothing on the table right now to do it; it’s just the board wants to be prepared for if that opportunity comes, and if it doesn’t come … then so be it. It has to be right for us.”
The recommendation to council included:
– Creating a holding company with Lennox, Yake, CAO Mike Givens, Mark Hillis and Paul Smith as directors;
– The township pay $4,000 in fees associated with creating the holding company;
– Wellington North transfers its shares from WNP to the holding company;
– Wellington North transfers the promissory note (a signed document containing a written promise to pay a stated sum) of $985,016 to the holding company;
– Wellington North will establish a 2018 operating budget of $49,100 for the holding wants to be prepared for if that opportunity comes, and if it doesn’t come … then so be it. It has to be right for us.”
The recommendation to council included:
– creating a holding company with Lennox, Yake, CAO Mike Givens, Mark Hillis and Paul Smith as directors;
– paying $4,000 in fees associated with creating the holding company;
– transferring township shares from WNP to the holding company;
– the township transferring the promissory note (a written promise to pay) of $985,016 to the holding company;
– establishing a 2018 operating budget of $49,100 for the holding company; and
– committing to providing operating finances for three years to support business development activities or until the holding company is self-sustaining.
The operating budget of $49,100 includes $18,900 for the board of directors, $25,000 for CEO/president, $1,500 for a financial audit, $1,200 for tax filing and $2,500 for business development expenses.
Councillor Sherry Burke asked if WNP’s service level will be safe guarded if there’s a new business opportunity.
Lennox replied the very purpose of establishing the holding company “is to safeguard the long-term of (WNP) as a locally-operated utility [serving] our community well, so we wouldn’t be even talking about this, if it weren’t trying to protect that.”
He added “there might be some utilization of resources cross-wise, which would be how we get cost savings and help keep rates low.”
Council approved the recommendation unanimously.
