Toronto Budget Issues – Toronto Hydro
October 15, 2007It surprises me that no one has really looked at Toronto Hydro as a source of income for the city. Toronto Hydro makes a guaranteed 9-10% on investment (regulated Utility) yet the city does not get all that back. It seams while the city is looking at reducing core services, they are allowing the Utility to spend our regulated money on non regulated businesses such as the Telecom and software companies (which in my eye are not as important as police and the TTC). The Telecom side of TH says they are profitable and looking to expand. They are profitable because they are not properly paying for the services that the regulated side provides them (and we pay for). Where is the money going to come from to expand the Telecom Bus…and where did the money come from that set up the non regulated businesses… US... the rate payer. Why is a regulated company playing in non regulated business. To my knowledge out of almost 90 electricity utilities in the province, they are the only ones playing in non regulated businesses like this. Why??? If we didn’t allow these non core business to continue TH would be able to provide the city 10’s to 100’s of millions of dollars a year (guaranteed through the regulated rates charged to us on our electricity bill) instead of waisting it in businesses that are already provided by private companies. Why are we allowing Toronto Hydro to play with our money when the City needs it. Why are we allowing them to continue??? Why is counsel not looking at this? Who is hiding what?
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Is this real? Why have I not heard about this? How can Toronto Hydro get away with this? And they are raising our electricity rates too. Are there not any laws stopping this? Why has this not been a hot topic in the news or at the city meetings?
Yes it’s real. Toronto Hydro is owned 100% by the City of Toronto. Toronto Hydro has a Regulated rate of Return and the city should be getting this money BUT they elect to allow TH to reinvest it in non regulated non core businesses (such as Telecom and other ventures) I have tried to get thier Financials from each company but TH does not provide that information. All money is rolled up into the Parent Company. Other Utilities separate these entities so the public can see what they are doing. Almost all other utilities have closed thier non regulated businesses because of backlash from the public but TH seams to be setting up an empire on our dime while we get hit up with $$$ cuts in core services. You can find more information At Toronto Hydro’s website or the Ontario Energy Board (which regulates the Utility). But you can’t get any info from the city although 3 counselors sit on the Board.
How much money are you saying the city can save by changing Toronto Hydro around. I looked at thier website and noticed that they have a few other companies. They have a lot of management too.
I don’t think I intended to save any money here. The city will receive more money from Toronto Hydro (10’s to 100’s millions every year depending on how it is done). The money TH uses today for non regulated businesses would go to the city to help finance the police, TTC, community centres etc. I think most people would agree that they would rather money going to primary services rather than to city wide WiFi internet service. In fact i would rather TH concentrate on keeping my lights on rather than providing a service (internet) that is already provided by the small ISP’s as well as the big guys like Bell and Rogers.
Susan Levy (The Toronto Sun) and others are already starting to look further into city business. see: Link
I am not a financial guru but it doesn’t take an expert in finance to look into the burning of money and loses to date in TH’s non core services.
I have done a little more work on the yearly reports of Toronto Hydro. Yes I agree they seam to have a lot of management. a lot of presidents etc. But I don’t think that is the issue. The way they have their reports rolled up I cant review how much money they are making or loosing in each business. They have merged the $$$ from their regulated and non regulated business. I don’t think this is right since they are a regulated entity owned by the city (which should have all of its books open for review). As well going back to 2003 there is a company called The SPI Group which looks to be owned by TH and OPG. They in essence wrote the company off and said they where selling it but Goggling the company shows it to be a well established Data clearing house and settlement software company. I didn’t see very much about this company since 2003 but I may be missing something.
TH should sell their other businesses like software and telecommunications and focus on their core business. How were they allowed to do this anyway. Why should Toronto citizens foot the bill for this unrelated business? My electric rates are too high. If TH was properly managed they could reduce their rates to the benefit of all Toronto citizens and companies.
Who are the people we need to communicate to in order to get things changed?
I am not very experienced in local politics and government so I need guidance here.
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.
As a small business owner in Toronto I think the idea of Toronto Hydro using my money to compete in the private sector is a sin. So I pay taxes. I pay for my Utility costs. I get hit with added fees everywhere. I work 16 hours a day to make money for my family and Toronto Hydro is allowed to compete in any Industry. They are a Utility that is supposed to protect me, not a party that I compete against. The City is doing the wrong thing by not using these guaranteed yearly funds to assist the city tax payers. If TH is in the private sector… where is my return on investment? What are the risks? I guess we will never know because the Utility doesn’t have open books.
This is a joke.
I did a quick look at Toronto Hydro Telecoms Press Releases off Google.
The question I have is what part of the Regulated side of the business is the Telecom using? Poles/hardware/fibre etc. And if Toronto Hydro is charging competitive rates to the Telecom where is this $$$ going. Directly to our city I hope.
As well are these rates public and can anyone use the Toronto Hydro infrastructure (Is it offered to the other ISP’s in the city at the same rates)?
At the end of the day we pay for the Utilities Infrastructure. To use it to compete against private industry (the tax payers (business owners) that pay for the Infrastructure)is some how not right.
Maybe I’m wrong???
I think you are right.
A publicly owned entity should not be competing with private enterprise.
Is there not a government (provincial or federal) agency that regulates such things to protect the public against such abuse?
That is an issue yet the real questions are …
Should TH provide more $$$ back to the city to save tax payers additional costs and make the city more affordable? I think Yes.
Should TH concentrate on reducing overhead to lower its regulated rates. I think Yes.
Should they get out of their competitive businesses to ensure they focus on their core business. I think Yes.
We all have to do our part to make the city a truly competitive market place. Why are they special?
I set up another comment about TH please go here
This weblog was getting a bit long.
Digging further, taking a very high level look at TH’s Revenues
They made over 2.5 billion dollars in 2005 and about 2.25 billion in 2006. This is the second largest utility in Ontario and one of the largest type utilities in North America. Yet I still don’t see the financial s split by revenue source (affiliate companies). I also looked at how the other only sizable Utility (in Ontario) does business with third parties. Hydro One has a Request for Proposal process which is open and on the Web.
Toronto Hydro has nothing that I can find at all. So what am I getting at…Is Toronto Hydro giving business to its other businesses without going out for tender? If so, then is this best for the tax payer and are we actually paying through our regulated rates to keep the competitive businesses in business. I need to say..at the end of the day it Toronto Hydro was strictly regulated or strictly unregulated I would not have an issue with this. But mixing the companies up into one bucket and having no public reporting or policies is in my mind dangerous and may not be in the best interests of the City.
Today the Toronto Star quoted that Toronto Hydro’s debt is $980 million to the city. You would think someone should really start looking at the books and what can be sold to achieve some sort of sanity here.