Update from Holdco – 2024

On June 13, a special Council meeting was called to hear the annual report by Holdco.  This is the organization that manages Cobourg’s Electricity and Water. I find it complicated but let me try to explain:  Holdco has two subsidiaries: Lakefront Utilities Inc. (LUI) which manages electricity and Lakefront Utility Services Inc. (LUSI) which manages water and some fibre Optics used for the Town’s Internet.  LUI owns the electric infrastructure but LUSI hires and manages all employees so the public deals with LUSI. So when Holdco reported on their year, there were actually four reports (more below). HOLDCO is owned by the Town so officially reports to Council but like the Police, they have a board with a Town representative: Mayor Lucas Cleveland.

LUSI people manage LUI assets to 1) deliver electricity bought from Ontario Hydro and 2) deliver water extracted from Lake Ontario.  They also manage a fibre optic network for Internet services to Police and the Town.

Highlights of Reports

1. Report by Holdco Chair: David Tsubouchi

  • Ensure full compliance with all related Acts, Regulations, Standards and Directives
  • Improve asset value while achieving appropriate annual rates of return
  • Mission: We are committed to responsibly delivering fair-cost, reliable, safe, energy and water solutions for the benefit of our customers through the uniqueness of our integrated utility operations.
  • Monitor all aspects of our Environmental Performance. Note: in last year’s report (see Blog report here), David made a point of talking about ESG (Environmental, Social, Governance) but it was barely mentioned this time.
  • HOLDCO Benefits to Cobourg from 2001 to 2023: Dividend $ 7,410,600; Interest $10,271,300.  Interest is because of a loan to LUI from the Town so that’s not really a “benefit” (see link in resources below).  And if there’s a profit (dividend), instead of it going to the Town to (hopefully) reduce taxes, shouldn’t it be a reduction in our electricity or water bills?  Just a thought.

2. LUSI (Lakefront Utility Services Inc.) – reporting on Waterworks – Robert Bell

  • New Elevated Tank & Booster Station (at CCC) – 25% complete as of 31 May 2024
  • Average annual water bill $507 – up from $473 in 2023.  This compares to the average for Port Hope at $1019 and Brighton at $607
  • Note that although LUSI invoices include a stormwater charge, they are simply providing a billing service for the Town for stormwater.  Therefore they did not mention it in their report.

3. LUI (Lakefront Utilities Inc) – reporting on Electricity supply – CEO Derek Paul in lieu of Gil Brocanier who has resigned his position on the board due to health problems.
LUI is aware of changes coming:

  • Customers are using less electricity because of efficiencies
  • Customers are generating and storing their own electricity
  • Electric vehicles are becoming more widespread and will be an increasing load.
  • Growth in Cobourg – approx. 39,000 residents by 2040
  • Infrastructure needs to be resilient to cope with severe weather and climate change means there will be more energy used for cooling.

Comments

  • No average customer electricity bills were provided nor was there a comparison with other municipalities like was provided for water.
  • A reliability graph showed a bad spike in 2023 but improved performance so far in 2024 ( see page 21 of presentation).
  • In October 2023, LUI posted an article on their web site acknowledging frequent short outages and committed to working to fix these. The HOLDCO presentation did not mention this issue.

4. Finance – Laurie-Ann Cooledge
Selected items – see Resources to download full report.

  • LUI (electricity) Net Income: $213,602
  • Waterworks Net Income: $2,910,894 – no mention of where this goes – into a capital account?

Councillors had no significant questions but accepted that HOLDCO, LUSI and LUI were doing a great job! Mayor Cleveland and others had kind words to say about Gil Brocanier – they thanked him for his contribution to the Town as Mayor and as chair of the LUI Board.

Resources

Cobourg Blog Reports

Other information

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15 Comments
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Kathleen
1 month ago

Why does Cobourg go against the norm for a small town? Why do we have this middle-man company, Holdco? Why don’t we get power from the source, Hydro One? Why isn’t the Water portion managed directly by the Town thrrough the Public Works Dept.?
Our own Police Dept. Our own Fire Dept. Our own Northumberland shared Utility Company.
Guess we don’t need to wonder why our taxes are so high.

Liz
Reply to  Kathleen
1 month ago

You don;t want to entertain the thought of Hydro One!! Their rates are “out of this world.” We are lucky to have the system we have.

Leweez
Reply to  Kathleen
1 month ago

Thank you Kathleen, finally another person speaking out against this Lakefront company.
Lakefront is a company supposedly set up to pay dividends to Cobourg. what a joke that is, hydro made $200k profit last year, how much dividend did we receive? Zero, that’s how much, how much rebate on our hydro bills did we receive? Zero, that’s how much.
This company focuses 80% of their time on your regulated electric department to make $200k and a mere 20% of their focus on your non regulated $2.9 million generating water department.
Is this how you would run a successful business?
Sell the hydro for at least $10 million and send the water department to the Town of Cobourg where it belongs.
Smarten up Mayor and Town Council
My God, how is this not obvious

Bryan
Reply to  Leweez
1 month ago

Leweez, Liz and Kathleen,

Holdco. Not much choice here. In 2000 or so, the Mike Harris Conservatives mandated that the local electrical utilities (PUC) were to be disbanded and re-organized into corporations emulating the structure of private sector firms. The thought was that this would facilitate the sale/mergers of the utilities and also aid in obtaining financing Cobourg is one of the few municipalities that has retained the holding company – sub structure. Many have just one company for electrical distribution.Hydro One rates: Can be high. Yet Peterborough’s 2023 rates ($22.62) are lower than Cobourg’s ($25.57) (Holdco 2023 Annual report)Customer satisfaction: A score of 77% is of concernDividends & Interest. Dividend $0, LUI Demand note interest $244,296. The infamous Holdco slush fund isn’t what it used to be. In its “glory days”, the Holdco group contributed almost $1M per year to the Town. Some (many??) suggest that rates should have been lower instead.Waterworks: The Town should do a better job of promoting its brand in Waterworks, the Town’s potable water “business”. LUSI is simply a contractor, hired to run the operation. Waterworks is departmental business unit of the Town. It should be part of the Public Works Department and report to the PW director. Waterworks’ $2.9M surplus in 2023 is not “free money” for the Town. It funds the expensive capital repairs and additions to the water system.The above notwithstanding, LUI and Waterworks are generally regarded as well run operations by their peers and regulatory agencies.

Last edited 1 month ago by Bryan
Kathleen
Reply to  Bryan
1 month ago

I worked for Ontario Hydro when the Mike Harris Govt. split the company into Hydro One and Ontario Power Generation. Between 1998 and 2000, Hydro One acquired 88 municipal electrical utilities. Many local/municipal distribution companies were also consolidated during this time. Why did Cobourg and Cramhe decide to create Lakefront Utilities in 2000? Why didn’t they let Hydro One aquire them?
And as you pointed out Bryan, Peterborough’s Hydro One rates are cheaper. And I don’t remember thinking our Hydro rates were so expensive (certainly more reliable) when we lived in Toronto.

Ken
1 month ago

My head is also ‘spinning’ John. Maybe too many fingers in the pot?
As a reply to Brian, we in our house, in the ‘Pebble Beach area, are paying $38.85 for water/ sewage charges (last month). Keep in mind we are on a ‘septic tank’!
Electrical was $167.38…… HST was $21.76.
It’s nice we got a ‘Ontario Electrical Rebate’ of $32.30 last month! Do we thank Doug Ford?
I’ll still vote NDP!

mrs bigley
1 month ago

The costs just keep escalating – with no particular reason – guess thats Cobourgs system

Cobourg taxpayer
1 month ago

As usual when Holdco et al report I feel left in the dark as it seems the presentation is all about patting each on the back on what a great job they are doing, which council then confirms by doing the same thing, patting everyone on the back. In the past I have attempted to decipher/interpret what is presented and it is too convoluted to follow. Bryan has done a great job previously at asking great questions of the Holdco gang which they then proceed not to answer. Remember they won’t even reveal anyone’s salaries.

Leweez
Reply to  Cobourg taxpayer
1 month ago

You hit the nail on the head, it was a sickening display of patting each other’s backs.
can some councillor actually take a deep dive in this cloak and dagger company and ask an actual question?
The electric department had a profit of $213k last year?
My goodness, sell this albatross, believe me, the people running this company aren’t that intelligent!!

Ben
Reply to  Leweez
1 month ago

Well if you put the thin profit against the fact that LUSI has some of the lowest electricity rates in the Province it looks like a good result to me

Leweez
Reply to  Ben
1 month ago

if Lakefront has some of the lowest rates for electricity in the Province,why didn’t they do a comparison to other municipalities like they did with the water?
Electric rate comparisons were their go to every year.
Not proclaiming that anymore🤔
Suspicious by its absence.

Bill
1 month ago

Average annual water bill of $407.00? My bill is approximately $100.00 per month (including storm sewer and taxes) and there are only two of us in our household.

Kevin
Reply to  Bill
1 month ago

Bill, what is your average water excluding stormwater charges? I think HST is only on the electricity part of the bill and should not be included with water cost. It is confusing. Based on my most recent bill I am paying significantly more than $507 annually (water and sewage).

Bill
Reply to  Kevin
1 month ago

Kevin,

I did my homework and you are correct about taxes on the electricity bill only. My storm water sewer charge is currently $5.05 per month and my usage (water/sewer) averages about $80.00 (monthly).

Bill
Reply to  Bill
1 month ago

I meant $507.00.