Of The Corporation of the City of Guelph, in its capacity as the sole shareholder of Guelph Municipal Holdings Inc.…

2:49going to kick things off with a presentation from Jennifer Charles, who is the corporate secretary of

2:55GMHI and then Jane Armstrong, director for Electro Utilities Inc. And also our very own

3:02City of Buffalo pointee is also going to have some words for us as well. But at this time I'll

3:07turn it over to Jennifer. Thank you. Thank you. Good afternoon Mayor Guthrie and members of Council.

3:15It's my pleasure to present the 2024 annual report for GMHI. As he said joining us today is Jane

3:21Armstrong, the director and board chair of Electro Inc. and the City of Guelph's appointee on the board.

3:35For those in attendance today who may not be familiar with the corporate structure,

3:38GMHI is a municipal holding corporation. Its purpose is to hold an equity interest in the

3:43securities of other companies. Presently GMHI owns 4.63% of the issued outstanding shares of

3:50Electro Inc. GMHI creates financial value to the city through its equity holdings and dividend returns.

4:01As at December 31st 2024, GMHI's investment in Electra is 108.5 million, an increase of 4.1 million

4:09over 2023. This figure represents GMHI's proportionate share of Electro's earnings reduced by dividends

4:16declared and paid. GMHI's share of Electra's 2024 income was 7.8 million and GMHI received

4:233.7 million in dividends from Electra, resulting in an increase in GMHI's equity share of earnings in

4:30Electra. GMHI's total comprehensive income in 2024 was 7.5 million and that's compared with 6.3 million

4:39in 2023, an increase of 1.2 million year over year. This favorable change results in a

4:46this favorable change is the result of a higher net comprehensive income of Electra in 2024 as Jane

4:52will speak to later on. The 3.1 million in dividends received from Electra was less than

4:57budgeted. There was a dividend income deficit of 32,000 compared to 2024 budget expectations.

5:05However, as the city benefits from reliable dividend income, GMHI manages the variability of

5:10dividend distributions from Electra. In 2024, GMHI remitted 3.8 million in dividends to the city as

5:18budgeted. In 2024, GMHI further reduced its residual commitments related to the sale of

5:26district energy and expects that the final 64,000 of costs will be incurred in 2025.

5:33As GMHI is no longer engaged in commercial activities through the district energy program,

5:38the corporation deregistered for HST purposes in 2024. Overall, GMHI continues to be a

5:51contributing asset for the city. It provides a predictable dividend stream and its investment

5:56in Electra continues to grow in value. The city will recognize a gain of 3.1 million to its investment

6:02in GMHI in 2024. Added to the dividend revenue from GMHI of 3.8 million, the city's net income from

6:09GMHI and its 2024 financial statements total 6.9 million. And it is now my pleasure to introduce

6:17Jane Armstrong and ask her to come forward to deliver an update from Electra. Thank you. It's

6:38my pleasure to be here again this year to speak to you regarding the performance of Electra over

6:43the fiscal year of 2024. Electra again has had a strong year with stable financial performance.

7:05Shareholders continue to have stable dividend support and we've been effective in providing

7:10customers with much better electricity reliability than the sector average and other large

7:15utilities. And in Guelph we continue to invest in local electrical infrastructure, underground

7:20cables and expanding capacity at the Campbell transformer station. While we focus on reliability

7:26and affordability, affordability for our customers is at the forefront in our minds. For those

7:31customers in need, we provide support programs to assist and Electra's delivery charges continue

7:36to be below the sector average of neighboring utilities. This slide provides an overview of

7:43Electra's performance and key statistics at a glance. In 2024, Electra demonstrated strong

7:49financial performance with net income at $139.2 million. This result exceeded the 2024 budget

7:56by $6.1 million and was marginally lower than 2023. The outperformance compared to budget was

8:03primarily due to increased net income from our power restoration business driven by higher

8:09storm restoration events and the acquisition of Gagnon line construction Inc. The competitive

8:15business has grown significantly over the past number of years with EBITDA growing from 2019

8:21of $3.2 million to EBITDA of $53 million in 2024, representing a KGAR of 76 percent. Electra energy

8:30solutions has also contributed $24 million in dividends since 2019, growing dividends from

8:37$1.3 million in 2020 to $11 million in 2024. The stability and consistency of the company's

8:44financial performance continues to be notable and Electra has continued to grow with the average

8:49annual revenue growth of approximately 4 percent since its its formation. Total assets are $6.2

8:56billion in 2024 with increasing asset base commensurate with required additions to distribution

9:02assets required to serve our customers. In 2024, Electra utilities net capital expenditures amounted

9:09to $358 million. This is consistent with the spending in 2023 and represents about a 20 percent

9:16increase over the 2024 budget. The increase is primarily due to the execution of OEB approved

9:23and mandated incremental capital module projects as well as higher customer connection costs

9:28resulting from the increased volume and timing of new subdivisions and ICI projects. With the

9:35continued emphasis on investment within the utility, rate base has increased by 8 percent since 2023.

9:42Rate base is expected to continue its growth trajectory in the foreseeable future as the

9:47utility prioritizes ongoing infrastructure renewal, system capacity, and expansion to address demand

9:54growth aligned with municipal and provincial development plans and investment in grid resiliency

9:59and modernization. Management anticipates that rate base will reach $5.8 billion by 2031

10:06which is 50 percent higher than it is today. This growth in rate base allows the utility to

10:12continue to provide stable revenue streams, regulated returns, capital appreciation, and enhanced

10:17dividends to its shareholders while also supporting municipal economic development.

10:24Synergies obtained through the original creation of ELECTRA and through the merger with Guelph Hydro

10:29have provided higher incremental dividends for ELECTRA shareholders. The dividend policy targets

10:3560 percent of shared consolidated modified IFRS net income. The 2024 budget for dividends was

10:45$78.2 million. Actual dividends paid were $83.1 million, $4.9 million above budget.

10:53Since formation ELECTRA has declared $588 million in dividends to the inaugural shareholders over

11:00the last eight years and the merger has provided dividends of $137 million greater than the standalone

11:06course of action would have provided. When including Guelph the merger from 2017 to 2024,

11:15ELECTRA declared 610.9 million dividends on common shares, $139.7 million of dividends higher than

11:25the shareholders would have received had the mergers not proceeded. In 2019 to 2024,

11:31City of Guelph has received $22.6 million in dividends, $2.5 million or 12.6 percent higher

11:41than Guelph would have received without the merger. ELECTRA has better reliability than the average

11:48LDC. In 2024, ELECTRA continues to improve reliability with better-than-target results.

11:56The industry uses two measures for reliability, SAFE, which refers to the frequency of outages,

12:02and SAFE, which refers to the duration. SAFE is the average number of times a customer may

12:08experience a power interruption. You'll see on the top of the slide that the average number of

12:14sustained interruptions a customer in Ontario may experience is 1.18 times per year. ELECTRA

12:22is 11 percent below the average at 1.06 times per year. By comparison, Toronto Hydro is 17 percent

12:29higher than ELECTRA, that is has a greater number of outages per customer, and Hydro-1 is much higher

12:35than ELECTRA. SAFE represents the average number of hours a customer may be out of power. On the

12:41bottom, the chart will show that on average customers in Ontario had no power for 1.49 hours per year.

12:49ELECTRA is 80 percent below the average at less than one hour of power disruption. Last year,

12:55Toronto Hydro performed well, having customer outage for approximately 47 minutes or 0.79

13:01of an hour. By comparison, Hydro-1 customers experienced on average 7.5 hours of outages

13:08last year. Customers are continuously looking at electricity through three lenses, reliability,

13:17affordability, and sustainability. With respect to affordability, the electricity bill is the

13:22ultimate test. ELECTRA's monthly delivery cost to customers is 8.6 percent less than the LDC average

13:30per 700 kilowatt hours per month. Looking separately at the delivery component of the bill,

13:37which is the portion that ELECTRA is responsible for, ELECTRA's monthly delivery component ranges

13:43from $47.95 to $50.82 or, on average of the five-rate zones, $49.55, which is 8.6 percent less

13:54than the LDC average. By comparison, Toronto Hydro is 26.2 percent higher and Hydro-1 14.3 percent higher.

14:04ELECTRA has been outperforming all other Canadian utilities on sustainability in 2024,

14:09as ranked by Corporate Knights. Corporate Knights ranks the best 50 corporate citizens in Canada

14:15based on its annual ranking of corporate sustainability performance. Corporations are

14:21selected from a pool of Canadian companies, including all those with revenues over a billion

14:26dollars. Each evaluated on a set of 25 ESG indicators relative to their industry peers

14:32and using publicly available information. The 2024 best 50 companies are at the vanguard of

14:39corporate sustainability leadership in Canada. ELECTRA was ranked as the best transmission

14:44distribution company in Canada in 2024, and overall ELECTRA ranks eighth among all Canadian

14:51businesses. And just announced on April 22 of this year, ELECTRA has also been ranked fifth global

14:59for public sector companies in 2025. ELECTRA has one of the lowest OMA-NA per customer values within

15:08the Ontario electricity sector. The OEM uses OMA-NA per customer metric as one of its measures

15:15of a utilities cost control. In 2023, ELECTRA's OMA-NA per customer is $262.76, which is 46 percent

15:26below the industry average. ELECTRA's total cost per customer is much lower than its peer-large

15:35utilities Hydro-1 and Toronto Hydro. Total cost per customer is calculated as the sum of the

15:40distributor's capital costs and OMA-NA costs, including certain adjustments to make the cost

15:46more comparable between distributors per reporting period. This amount is then divided by the total

15:51number of customers that the distributor serves. ELECTRA will be filing a rate rebasing application

15:59for rates effective January 1st, 2027. Extensive customer opinion research of our residential

16:07and business customers has been done over the past year, and more than 80 percent of our

16:12respondents agree with the capital plans. The distribution system plan details ELECTRA's

16:19operational priorities for the five-year rebasing period 2027 to 2031. Those key things are renewing

16:28and replacing infrastructure, investing in assets and infrastructure to ensure reliable, safe, and

16:33dependable delivery of electricity. Meeting organic electricity load growth, ensuring the

16:39capacity to support current and future demand in the face of changing energy needs. And investing

16:46in resiliency and modernization to improve reliability and shorten outage response times,

16:52particularly in storm vulnerable regions of the system. The plan will balance the need to increase

16:58capital spending to meet growing customer demands on the grid while keeping rates affordable for

17:03customers. In 2024, ELECTRA invested $10.4 million and delivered significant capital renewal projects

17:18and upgrades impacting customers in Guelph. Those included completing $3.7 million of overhead

17:25system renewal across multiple areas in the city with the replacement of deteriorated poles.

17:32A multi-year feeder expansion project was started with the Campbell Transformation

17:40to support growth with additional capacity to connect customers. $1.6 million of commercial

17:48customer connections were completed supporting economic development and job growth in Guelph.

17:53And assets to support road widening in the Baker District development were relocated.

17:59In 2025, ELECTRA plans to invest $11.9 million in significant capital projects in Guelph.

18:07These will include replacing aging infrastructure including poles, transformers, and switch gear.

18:14Modernizing these elements will help minimize disruptions and improve the reliability of Guelph's

18:19energy grid for residential and commercial customers. Deploying an additional five new

18:25automated devices enabling swift response to grid disturbances, optimizing performance, and

18:31minimizing the impact of potential disruptions on the community. Continuing with the multi-year

18:36feeder expansion project with the Campbell Transformer Station to support growth with

18:41additional system capacity and connecting new customers accommodating growth and development

18:46in Guelph. ELECTRA proposes to increase capital investment in Guelph over the 2026 to 2031 period

18:53with plans to invest $90.4 million to renew and modernize the electrical infrastructure,

19:00add system capacity to support growth and development in the community, and make the grid

19:05more resilient to storms and extreme weather conditions. ELECTRA's increasing capital budgets

19:13will necessitate non-municipal financing which will require updated tax policy. ELECTRA accounts

19:19for approximately 20% of the of Ontario's asset base with a growing service territory. Therefore,

19:25ELECTRA will require a considerable portion of the EDA's forecasted capital requirements.

19:31ELECTRA has done significant advocacy with both the provincial and the federal government over

19:35the last 18 months in an effort to remove tax barriers from non-municipal financing options.

19:42Specifically, we have requested that the federal government increase the 10% threshold for non-

19:47municipal ownership. Late last year, the federal government committed to exploring our proposal

19:53in their fall economic statement. The province has also expressed an interest in this topic,

19:58and we expect to hear more on this matter in their integrated energy plan, which will support our

20:04advocacy. In 2024, the ELECTRA CARES Community Support Program touched many front-line agencies

20:17and institutional partners in Guelph. A priority was put on youth and families in disadvantaged

20:22communities, food security issues, access to health care, as well as equity, diversity, and

20:28inclusion. The total 2020-24 investment in community support programs in Guelph totaled

20:35approximately $153,000. This investment has been renewed for 2025 as ELECTRA continues to support

20:43front-line social service agencies in Guelph. 2024 saw the final year of a three-year commitment

20:49with Guelph General Hospital Foundation of $180,000 for sterilization containers for surgical

20:56operating equipment, helping the hospital reduce waste. In 2025, ELECTRA has committed to a new

21:04partnership with GGH of $300,000, $60,000 over each of five years, to assist in establishing a new

21:12women's health diagnostic imaging center. In summary, ELECTRA needs to continue to invest in

21:22the electricity distribution system that supports customers and is building for the future. The

21:27business environment continues to change with announcements of U.S. tariffs. Discussions and

21:32advocacy efforts continue with federal and provincial governments on a model to provide

21:36sustainable financing to the sector. ELECTRA's regulatory team has been successful in obtaining

21:42annual inflationary increases. The most recent increase in 2025 was 3.3%. ELECTRA's territory

21:50is growing. Its assets are aging and require renewal and replacement, and we must address the risk of

21:56climate change on the system, which supports one in five customers in Ontario. Shortly, we will

22:03be submitting a rate-rebasing application, which will address many of the issues that ELECTRA faces.

22:08Further discussions will be necessary to ensure that ELECTRA has the sustainable financing needed

22:13to provide service to its customers. Thank you. I'll be happy to take any questions.

22:20Thank you, Chief. You're both. We really appreciate it. Let me see if there's any questions before we

22:27get to the main recommendations that are in front of us. I'd call her, please. And then Billings.

22:34And then, Kate. Through your worship. Thank you very much for your presentation. I really appreciate it.

22:41I wanted to understand with the rate-rebasing, if it's going to happen in 2027, will we then

22:47expect a rate increase at the end of that year or the following year? Yeah, the rating increase

22:53will be effective January 1st, 2027. So the rate-rebasing will be filed later this year.

23:00Okay. Okay. Perfect. Okay. Thank you. And how will end-consumer affordability be calculated

23:09into those? Because I'm seeing that the regular rate increases are 3% to 4%. So we might be expecting

23:16maybe a doubling or tripling of that to accommodate for the capital needs.

23:20Yeah. I mean, you'll see more when the application is actually filed. And the Ontario Energy Board,

23:27part of their role is to ensure that affordability is part of the picture. Certainly something that

23:33we're considering. And that's why we have extensively sought the opinions of our customers.

23:41We've put to them various ranges of investment and sought their opinion as to what we should be

23:49investing in in the coming years. So we've been certainly incorporated that into the plan that

23:54we're putting forward. And as we've noted, we are including affordability as part of our direction.

24:00But we also have to keep in mind that we do have to make investments to deal with all of the issues

24:05that I've raised from resiliency and replacing existing infrastructure to dealing with increased

24:12growth, which is good. We want to have increased growth, but we have to provide the service to them.

24:17Yeah. Yeah. Absolutely. I really agree with that. And I was glad to see that the Campbell

24:22transformer station is being upgraded. I know it's one of the factors that's holding back

24:26all of residents from selling solar panels. Do you have a timeline for when those upgrades will

24:31be completed for the camp? I don't, but let me take that away and see if I can find that out for you.

24:36Okay. Okay. Thank you so much. And the last question to your worship, the allocation for

24:42community grants is currently 153,000. Will that allocation go up after the rate revasin?

24:50There's a budget that's passed every year by the board in terms of overall electric

24:56care support. So certainly I think we will look at what our total budget is to determine whether

25:03or not we can then increase the allocations across the across the territory. And is that

25:07distributed by population basis? Yes. Okay. That's right. Thank you very much. Thank you,

25:13worship. Thank you. Billings then, Katie. So, through you, I wanted to ask about the slide.

25:20It's the 103 to 120 billion for the net zero scenario. So if a lecture is 20%,

25:30then that's around ballpark 20 to 24 billion. And with our share, does that mean then

25:38Guelph would be responsible for about the one one billion in costs? Well, we're not necessarily

25:45proposing that we look to the shareholders to contribute that. We're looking at various scenarios

25:50to, to, to provide the financing that we will need to make the investments.

25:57One option might be for shareholders to make that investment, but that's one of many options

26:04that are being considered. And as I indicated earlier in my remarks, one of the options that

26:09we're looking at is if we can reduce the or increase the threshold that would allow pension plan

26:16investment into the organization that might allow additional financing that wouldn't require the

26:21shareholders to fund. And through you, that's what I wanted to ask about is the increase to this 10%

26:27threshold for non municipal ownership. So that means selling shares, but then,

26:33then does that not make our value decrease? Well, you're certainly yes, your share and

26:40as would all of the other shareholders interest in the company would be diluted. You would have a

26:46smaller percentage because there would be more shareholders. But presumably by making a significant

26:54investment, you'll have a smaller share of a much larger pie. Okay. The reason why I wanted to ask

27:01about this is just because I, so I'm, I'm basically, you know, future forecasting. And this is of course,

27:07a lot of money. This is billions and billions of dollars. So with the forecast of the amount of

27:13revenues to come in versus the enormous capital costs. So do you see revenue, like the dividends

27:22maybe decreasing? And of, and of course, probably larger rate increases then to cover this cost?

27:29Well, the rate, you know, we are the rate in the rate application clear right now is dealing with

27:3527 to 2031. So we'll have to look at each successive rate application. The means that the projection

27:42that we're talking about in terms of investment is for some, a number of years, it's not sure it's

27:46not just 27 to 31. We're looking at investments over long term. In terms of, yes, one of the options

27:59and again, nothing, you know, nothing in particular is being considered, you know,

28:03considered as a final solution at this point, a number of options are being considered.

28:08If you Toronto hydro, who is the city of Toronto, who's the sole shareholder of Toronto hydro,

28:16chose to inject capital and agree to basically a halt on dividends, pardon me, in order to fund

28:25some of the investment that Toronto hydro had to make. So that is an option. It is not one that

28:31is currently being put forward as concrete, but it's an option that would be could be considered.

28:38Okay. Thank you, Jane. You're welcome. And Keaton, please. Thank you. Through you, Mr. Mayor.

28:46I was just wondering, is Guelph considered an inaugural shareholder? And could you please let

28:52us know the difference between inaugural shareholders and others? Oh, so inaugural refers to the

28:58inaugural shareholders were Horizon, Ener, Source and Power Stream. Those were the, and the shareholders

29:07of those companies because that was the initial merger that took place in 2017. And Guelph merged

29:15with Electra, which was formed by the inaugural shareholders. And the Guelph merger took place

29:22in 2019. Thank you so much. You're welcome. Great. Thank you, Jane. We appreciate your

29:31and being our representative. We're fortunate to have you. Thank you very much. My pleasure.

29:36Happy to be here. Thank you. Thank you so much. Just before we get to the governance update,

29:42can I at least get the recommendation that the Council of the Corporation of the City of Guelph

29:46in its capacity as the sole shareholder of Guelph Municipal Holdings, Inc. receives the GMI 2024

29:53annual report and audited financial statements to shareholders for information. It looks like

29:59Alt is moving that for me and call rule second. Is there anything further? Alt's called the vote

30:06there on on receiving the information. No one's against. That's great. That's unanimous. And

30:12then we're into the governance update. There's going to be four recommendations.

30:17Would someone be willing to move those four? The receiving is number one. And that number two is