Should Toronto Hydro be Forced to sell its Non Regulated Assets
October 22, 2007The City of Toronto has just established a new panel charged with giving the City’s budget the once-over. They can consider every possible way of saving money, from selling city real estate to contracting out. Yet Miller has also said Toronto Hydro is not for sale. We in the city need to deal with new taxes (land Transfer /motor vehicle /property tax increase etc) while Toronto Hydro can continue to run business as usual. I don’t agree with this. I am not asking to sell the utility. That would be wrong. It provides large retinues annually. But the city counsel and new panel need to look at how much more $$$ can be injected into the city through Toronto Hydro regulated rate of return. The city also needs to take a very serious look at Toronto Hydro’s non regulated services and investments. This may be a way to lower the burden on the tax payer while at the same time have little to no effect on our lives in the GTA.
I found City Objectives in Shareholder Direction to
Toronto Hydro Corporation dated April 16, 2007.
see here
It states (Article 2.3 Principles)
The following principles will govern the operations of Toronto Hydro:
(a) The Business is integral to the well-being and the infrastructure of the City of Toronto. The Corporation recognizes that it is in the best interests of Toronto Hydro and the community of stakeholders whom the Business affects that Toronto Hydro conduct its affairs:
(i) on a commercially prudent basis;
(ii) in a manner consistent with the energy policies established by the Shareholder from time to time;
(iii) in accordance with financial performance objectives of the Shareholder
(b) THC will provide, through the Distribution Company, a reliable, effective and efficient electricity distribution system.
(c) Distribution rates applicable to customers of the Distribution Company will be set by the Board in accordance with the rates fixed by the Ontario Energy Board from time to time.
(d) The Business is at all times subject to such licences, codes, policies, rules, orders, interim orders, approvals, consents and other actions of any Regulator.
(e) Toronto Hydro will provide its services with an emphasis on customer orientation and satisfaction.
(f) Toronto Hydro will operate in a safe and environmentally-responsible manner.
(g) THC will promote energy conservation and environmental responsibility.
(h) The Board is responsible for determining and implementing the appropriate balance among the foregoing principles and for causing Toronto Hydro to conduct its affairs in accordance with the same.
(i) THC will operate in a manner that will protect and enhance the City’s urban forest.”
also found subsidiaries in TH.
Could not find too much on EBT Express (see below) but a lot on The SPI Group.
and the question I have on the Telecom business is on its 450 km fibre optic network …. what return on investment did the regulated side get for selling the non regulated side the network. Thats big bucks. Where’s the money????? Wheres the ROI?
Subsidiaries of Toronto Hydro Corporation:
Toronto Hydro-Electric System Limited
A subsidiary of Toronto Hydro Corporation, Toronto Hydro-Electric System Limited delivers electricity through a complex network of poles, wires and underground structures to 673,000 customers and distributes 18 per cent of the electricity in the province of Ontario.
Toronto Hydro Energy Services Inc.
Toronto Hydro Energy Services (TH Energy) is a professional energy services company focussed on helping businesses, property managers, industrial facilities, institutions, and government reduce their energy consumption and realize sustainable energy savings. TH Energy is also firmly committed to energy conservation and renewable clean energy initiatives. As the energy management subsidiary of Toronto Hydro Corporation, they operate independently and at arm’s length.
Toronto Hydro Telecom Inc.
A wholly-owned subsidiary of Toronto Hydro Corporation, Toronto Hydro Telecom provides data services throughout Toronto to over 400 commercial addresses through its 450 km fibre optic network. The company offers a full suite of data services including Ethernet, Private Line, Voice over IP and Internet Access.
Toronto Hydro Street Lighting Inc.
Incorporated in 2001, Toronto Hydro Street Lighting Inc. is the newest subsidiary of Toronto Hydro Corporation. Continuing a 92-year tradition of service excellence, we are committed to providing exceptional quality street lighting services to established customers, contractors and new customers across Ontario.
EBT Express
A joint venture of Toronto Hydro Corporation, Ontario Power Generation and the SPi Group, is the first of its kind in North America providing centralized electronic data management and transaction services to local distribution companies (LDCs) and energy retailers. For the purposes of billing, LDCs and retailers send information back and forth to ensure customers’ accounts are accurate. EBT Express acts as the clearinghouse or “hub” where transaction information is exchanged.
Think they should sell the non core businesses. My regulated utility should not be in the competitive business against the tax payers / rate payers that pay for them.
I also see a lot of potential conflicts of interests here.
Are/have the non – regulated businesses paid a competitive price for services.
As well is the regulated side being charged more by the non regulated side (in essence subsidizing the non regulated business) and in essence increasing our utility rates.
ouch… not a good mix.
Someone really needs to dig their teeth into this one.
Also of interest, found out that the Telecom part is actually spending a lot of money building facilities into Mississauga??? Where is the accountability of return??? paying money to build facilities into another city….is that what we are paying for?
If that is in fact true then Toronto is not even receiving the added employment or taxes. Maybe that is why they are building there. Lower taxes.
Did they change the name from EBT Express to SPi Group or is this a totally separate venture?
Why would a utility want to get into this type of business anyway? It just does not pass the common sense test.
It looks to me that Toronto Hydro and Ontario Power Generation use SPi’s Services. Here is what I found on The SPI Groups Website.
“Over 70 energy market participants use The SPi Group’s products and services to conduct their mission-critical business activities. In the province of Ontario, our client base for this service includes 56 out of approximately 85 electricity local distribution companies (LDCs). This client base is comprised of 80% the total meter base in Ontario and 12 out of 14 retailers, with approximately 99.9% of the retailer-enrolled electricity consumers in Ontario.”
I would have the same question with this company… is there subsidization? I tried to find Financial info on these guys. 2005 TH Annual report
http://www.torontohydro.com/corporate/investor_relations/financial_reports/annual_reports/2005/pdf/AnnualReport2005.pdf
1455948 Ontario Inc. [incorporated December 21, 2000] – which owns a 50% interest in EBT Express Partnership [“EBT Express”], a joint venture
with a wholly-owned subsidiary of Ontario Power Generation Inc [“OPG”]. EBT Express owns a 67% controlling interest in The SPi Group [“SPi”], a
corporation formed to provide, among other things, centralized electronic data management and transaction services to energy industry participants.
It looks to me that Toronto Hydro and Ontario Power Generation use SPi’s Services. Here is what I found on The SPI Groups Website.
“Over 70 energy market participants use The SPi Group’s products and services to conduct their mission-critical business activities. In the province of Ontario, our client base for this service includes 56 out of approximately 85 electricity local distribution companies (LDCs). This client base is comprised of 80% the total meter base in Ontario and 12 out of 14 retailers, with approximately 99.9% of the retailer-enrolled electricity consumers in Ontario.”
I would have the same question with this company… is there subsidization? I tried to find Financial info on these guys. But all I found in ther 2005 TH Annual report is
1455948 Ontario Inc. [incorporated December 21, 2000] – which owns a 50% interest in EBT Express Partnership [“EBT Express”], a joint venture with a wholly-owned subsidiary of Ontario Power Generation Inc [“OPG”]. EBT Express owns a 67% controlling interest in The SPi Group [“SPi”], a corporation formed to provide, among other things, centralized electronic data management and transaction services to energy industry participants.
Why is TH in this business too????? I have no idea. BUT …. WHERES THE MONEY from these investments or how much is burned???
Who do we contact to for accountability on all of this?
This is absolutely crazy, What does a hydro know about running commercial business’?? I for one would not bank my tax money on utility management!
Apologize for the directness, just very frustrated with overall accountability in this city.
If anyone knows what feathers to ruffle for greatest impact, please let me know. Hydro will be our first victory, I do know of some influential individuals that depend on funding for re-election. maybe one in the same as the hydro board!!
I added this to my other comment but I guess it is good putting it in both spots.
You could start here:
You can go to the city Budget committee
Go to any of the Counselors
Or go to The Toronto Hydro Board that manages the business plan of TH and allows them to do what they do.
The Councilors on the Board are Gord Perks,Bill Saundercook and David Shiner.
After looking at the BIO’s of the Board it doesn’t look like there is anyone with a background in energy or Utility Regulations in Energy.
I also think it is important to discuss this with others and at least ensure that this issue or as I look at it opportunity for the city is properly reviewed by the right people.
Guess who just brightened up my day?
Thanks a lot!
With the announcement by the Fed Government this week on the entry of new mobile carriers and the frequency auction in May of 2008 (these fequencies will carry mobile and Internet at very high speeds) this makes TH’s Telecom Business almost worthless. SELL NOW or just close the doors and stop the bleeding. As I mentioned a Utility should not try to compete in the non regulated market. They made a key mistake going Open WIFI when WIMAX is around the corner. The only other way TH can get out of this mess is bid in the Auction (spending much more of our $$$). Then they will have to compete against the old boys like Bell and the New entries like the Big US telecoms.
Who has their eyes on the ball here????
TH just Announced this week that they will look into selling the Telecom. It’s about time. lets see if anyone has the guts to see if there was any sharing of assets between the regulated and non regulated side.
I read the Union opinion to the sale…..this will be very interesting to say the least. THC is really taking a “its our business and we’ll do what we want” approach to this. I wish they took such a cavalier approach to their core business. If in fact the telecom company has potential to churn profit and revenue, why would we want to sell?? That is out problem here in TO, we sell entities that could in the long run subsidize costs or infrastructure builds. Look at what these individuals at Hydro did with the water heater business…..cash cow to say the least. Love to see if there is any affiliation with the new gentleman running the fund that bought the heaters. Apparently he was a senior manager at Hydro One. Tired of these guys scratching each others back at our disposal. (Someone should really look into that) I did hear that the mgt team at the telecom sub are somewhat inexperienced, get someone in the lead chair with Telecom experience and see if we could make a case of going forward with it as a means of reducing our tax burden. Apparently some analyst pegged the hydro telecom unit at $130 million rther than their previously predicted $112 million ???? how could they come up with that number if the financial reports are consolidated with the hydro? cahoots is the theme here…Miller is this how you run your….sorry OUR city run companies? no wonder your starting to feel the winds of change.