City Council as Shareholder of GMHI

1:53Okay, I'm gonna call this meeting to order

1:56We all have different hats on now. This is the Guelph municipal holdings, Inc.

2:02shareholder meeting

2:04so

2:06for the new counselors

2:08You can call me chair now and

2:11For the new counselors our CAO is now the CEO

2:15We have different hats on now. So

2:19Because the city of Guelph is 100% shareholder of these corporations, so a unique little system here

2:27So I'll just again call the meeting to order. It's just for the public and for the record

2:33It's Wednesday, June 14th 2023 just after six o'clock

2:37And we are I'm calling the meeting to order is there any disclosure of pecuniary interest

2:41Or any general nature there of for what's in front of us tonight?

2:45And I'm hearing and seeing none

2:49confirmation of minutes, please from March 28th

2:532023 to be confirmed as recorded and without being read and counselor Karan

2:58I think I saw your hand just go up there. I believe I did. Yep, and how about a second or forming councillor all will do that

3:04Thank you anything further on those minutes

3:07Seeing and hearing none. I'll call the vote on as anyone against the minutes

3:12All right, don't see any that's unanimous. Thank you

3:16And we do have the consent

3:19agenda

3:21Which is the

3:232022 Guelph Municipal Holdings Inc audited financial statements

3:28and

3:29There is a motion there or these statements for the year ended December 31st

3:372022 to be received for information

3:41And wondering

3:43If I could get a mover for that, okay Gibson. Thank you and Galler is seconding and

3:50any questions on that before

3:53Go any further? No, okay. I'll call the

3:55Call the votes unless there's any comments any comments anybody again don't hear or see any okay

4:01I'll call the vote is anyone against

4:04receiving

4:05audited financial statements for information

4:08Again, I'm hearing and seeing none so that's unanimous

4:13And we are on to the last part where our CEO of

4:19Guelph Municipal Holdings Inc

4:22Scott Stewart will give us an annual report of the

4:272022 GMI

4:30Workings and the stuff that happened go ahead

4:35Well, good evening and thank you chair and members of council as a shareholder and of course our community

4:39That's listening in tonight

4:41We have purposely set up this evening to deliver presentations to you on the collective results from operations for the year ended December 31st 2022

4:50You've just received of course a presentation

4:53Of the city to go out to consolidate the financial statements

4:56I'm here as the mayor is explained as the chair is explained as the CEO and director of Guelph Municipal Holdings Inc

5:03Following this presentation

5:04I'll be back with you as the CEO and director of the municipality's interest in Guelph chunks and railway and these two corporations are

5:10Consolidated in the financial assets of the city of Guelph

5:13presented just minutes ago

5:15So as members as shareholders, but as members of council as the shareholders, you'll recall

5:20Journal orientation sessions in the fall you may recall there was a lot of information flowing out of the tap that

5:26That Guelph City council is the sole shareholder of the two municipal corporations GMHI

5:32Guelph chunks and railway and unlike the governance of council on the administration of the city

5:37It's a minute and its municipal role as a shareholder council governs the operations through the board of the municipal corporations

5:45Sounds more complicated than it really is but just to sort of walk everybody through it

5:49It's a subtle distinction

5:50But one one that's worth noting that I'm we will keep coming back to I'm presenting to you as the director slash CEO role rather than more

5:57familiar CEO role

5:59I'm also joined by our CFO and treasurer trevally and corporate secretary and legal counsel Christopher Cooper

6:05So again slightly different roles they play in terms of the board

6:09So thank you for allowing me that few moments to just set the context of the city's relationship with both

6:15Corporations, I'll move to the actual presentation now and it is my pleasure

6:22To give you the results of the operations for GMG MHI for 2022

6:28My last report to you identified the GMHI engaged in two streams of business the direct operations of district energy services

6:36And the other as shareholder of the city's 4.63% interest in electric utilities Inc. As

6:43The shareholder is aware staff have successfully facilitated sale of district energy assets to Kiskara

6:49The main takeaway in the transaction for me

6:51And I hope for you as you hear me say it is the transaction was our exit out of the district energy sector and the avoidance

6:58And this is the significant part the avoidance of significant

7:02obligate the obligations under the contract cost to

7:06GMHI and as customers and to transition their operations to

7:10Conventional services, so we've been through a lot

7:12We don't have to you know rehash all of the energy pieces the good news here as we've been able to separate that

7:18And you'll see that it moves off her books a little later when I get to 2023

7:24So going forward we will hold the city's interest in electric

7:27And this was always the result that staff set out to achieve when the merger occurred in 2019

7:32And I know not all of you were here in 2019

7:36The the merger the electric merger was a matter of significant

7:40consideration for council at the time leading up to the 2019 merger decision and at electors most recent annual general meeting in

7:47April of this year

7:48Electro CFO presented that Guelph has expect experienced a 34% benefit over its projected standalone scenario

7:56So again not going to back in time, but just that standalone scenario of just having

8:02Guelph as a standalone operation or how does it fit into electors operation?

8:06So that's their position from their CFO and this is an indication

8:10I think in my mind that the merger decision was a substantial benefit to the city on our long-term financial plan

8:18GMHI is committed to our collective effort to prepare a four-year multi-year budget and as a CEO and director

8:24I'm collaborating with our staff so again not distinction of collaboration with our staff on the annual dividend

8:30Forecast and that will accompany our budget presentation to you at the council later this fall

8:34As the report indicates the GMHI's investment declined because of the receipt of dividends from Electra

8:46They were higher than 2022 the share of proportionate earnings

8:49This is an accountant treatment that tracks and reflects GMHI's investment in Electra

8:54The decrease in the investment should not be interpreted as a decrease in value

8:58The dividend payment in 22 to the city increased by 200,000 to that that rounds it out to the 3.74 million

9:05You see on the screen

9:07Really, this is great news and it reflects the ongoing revenue stream that flows to the benefit of the city

9:12While not to directly engage in the hydro sector

9:17Having GMHI focused and solely on their Lactra shares allows us to manage the flow of dividends in this case and

9:24GMHI was able to release that 3.7 million in dividends rather than the comprehensive income of 2.9 million

9:31There was 540 thousand 547 thousand lost

9:36Represented by GMHI shareholder equity and this is a reflection also of the 3.7 million dividend being higher than the 2.9 million

9:43Comprehensive income for the year and not slightly offset the

9:47217,000 income tax consideration and again those are a lot of numbers to flow out yet

9:52And certainly if you have questions, we'll we'll make sure that we answer them in detail for you here as well

9:59In 2023 represents our first full year simply a shareholder of the city's 4.63 investment in Electra

10:05It may be helpful

10:07for you to be aware of the

10:09Considerable proportion of the other municipalities that are also shareholders of Lactra

10:14They are very similar in structure to ours. So we're not off doing different things. It's just similar manner and the other shareholders of Lactra

10:22Treat it the same way that we're treating it here as municipal staff. So I think that's good news as well

10:26We're not out in a limb all by ourselves

10:28and with our investments with Electra and

10:31Staff involved in the oversight of the GMHI's operation continue to address opportunities to be more effective and efficient in its operation

10:39With the purpose of maximizing the declared dividend considered at year end

10:43Simply put we're committed to reducing the operational cost to GMHI to maximize the flow

10:49The flow value to the city through declared dividends

10:52And finally, let me say this counts to this council, which will rattle if it rattles flies its municipal 24 to 27 strategic plan in july

11:00GMHI is aligned to the themes of that strategic plan

11:04And we'll ensure proportionate interests are presented to Electra through our shareholders representative that you just

11:09Reappointed our last meet on march 28th as well

11:12Electra is committed to climate action as indicated they're in their AGM

11:17In april and they've also reduced greenhouse gas emissions by 23.1 percent since 2016

11:24So with that I'd like to thank the many staff from the city and within the city that

11:29Along with their ongoing role for municipal perspective also contribute to the success of gmhi

11:35So i'm fortunate to serve as the seo director and want to thank staff commitment to gmhi's gmhi success and overall strategic

11:41goal of making the city of gual future ready

11:44And members of council as a shareholder of gmi it's been my pleasure to provide you with the presentation this evening

11:50I and others are available to address any questions that you might have so with that, mr. Chair will turn things back over to you

11:57Great thanks. I think you you know you you lead it out pretty pretty well

12:01So thank you very much and uh, is there any any follow-up questions that are required in regards to what was presented? Okay, counts are

12:08Uh, councillor goller, please

12:10Thank you to your worship chair guthrie

12:15Mr. Stewart, as I understand it from from the presentation

12:19Now the sole assets of gmhi are our stake in electra. What is that that worth? What is that 4?

12:27x percent

12:31Hi through you chair guthrie to

12:33the member

12:35Councillor goller, it would be very difficult for us to estimate the valuation of shares

12:40It's not something that is simply it's not on the tsx or anything like that

12:43It would require a specific engagement to value the proportion of that and that's not available for this evening

12:50Okay, no, I appreciate that and uh and as a follow-up

12:56Do

12:57two municipalities ever

12:59Liquidate their shares and make them available to the other members. Is that something that has has happened to date?

13:05that we have been

13:09through chair

13:10Guthrie to councillor goller just as a reflection

13:14The meetings that we participated with both my colleague, uh, mr. Cooper myself and

13:19And mr. Stewart

13:21There is a unanimous shareholders agreement that governs the transactional activity of the shares of electra

13:27And although I am not able to quote it specifically. I didn't come prepared without this evening

13:31There is I believe within that agreement

13:33A first right of refusal to existing shareholders that are within

13:38The current shareholders. Great. Thank you very much

13:42Thank you worship

13:44And then oh rork, please

13:47Uh, thank you chair guthrie through you to our CEO

13:52um

13:53You just helped me navigate the two hats. I've got two questions and they're they're both about us as a shareholder of jim hi

14:01Uh, and also as members of council. So I'm just trying to figure out some of the impacts on

14:06the city wearing both hats so

14:09Electra is going to stop providing water meter reading billing and collection services on behalf of the municipality at the end of 2024

14:18That has some financial impacts on the corporation the city of guelph

14:23So good decision for electra to get out of that but creates a cost

14:28For the city

14:29So when we look at our relationship with electra and us as a shareholder

14:33Do we look at both those pieces? Do do we look at that and say?

14:37Overall net this is the result or

14:41So I understand what what these financials are telling me

14:44Do we step back and look at both pieces and look at things on balance?

14:48Through you mr. Chair. So the simple answer is yes

14:53um, and we we have been working with uh, hamilton have taken as they're also a part owner of electra

14:59They've taken a lead on this and it's working its way through their procurement process

15:04Um, we're in and there's uh for the election me right here right now

15:07There's two other municipalities that are doing it as well through their procurement process

15:11Just from an efficiency perspective and then we'll include that so we'll report it overall in our books

15:17The city will so the ceo answering you now will report it in our books. So you can't just see

15:23A decision made by the electric board

15:26Benefits yes benefits them and around the bot way they've found savings. So it shows up perhaps in the dividend

15:33The balance that you're talking about is so what's that cost to us?

15:36And we're working our way through that both our finance staff and our and the environmental services staff

15:42Is this better from a customer service perspective?

15:44So we'll go through that and then but has it increased costs and what's the net balance of that and you will report that in our annual statements

15:53Mr. Chair to the counselor and you'll see it start to net its way into what you heard tonight earlier from

15:59shanna and the kpmg

16:01Appreciate that. I'm just trying to follow that particular bouncing ball. Okay. Uh through your chair got three two to our

16:08ceo for gulf municipal holdings

16:11um

16:14I'm trying to understand so i'm not a you know activist shareholder here. I'm trying to understand

16:19Do we know what the philosophy is of electra? So electra as a corporation wants to maximize the return for shareholders, right?

16:27And those are the municipalities

16:29So that is good from a dividend perspective

16:32But it may not be good from a utility rate perspective for the residents of the city of gulf or the municipalities

16:40So what's electra's approach to that?

16:44So three three mr. Chair

16:47I would also say this

16:50Because there's an approach by their board

16:52And we have a role in that of course through our representatives that we put there

16:56But they're also a regulated industry. So they they take direction

17:01There is times that an electra or you know any of the bigger power utility companies

17:06May go to the regulator and they don't always get what they are asking for

17:11And so that's where the provincial government plays a big role in terms of is this is this a benefit or not to both the residential rate pair

17:21Our consumer and as well as there are institutional and commercial industrial commercial areas as well

17:27So I think that's why you see a lot of

17:29You know

17:30Do your wash and it's certain

17:32You know the dish washing and other things at certain times at night the regulator pushes that onto

17:36a corporation like electra and then they've got some facility

17:40philosophies out of the board

17:42And and our miss armstrong represents us that way at the board

17:47We obviously participate, but there's a role for us as the as the

17:51The gmh i board as well. So we're keeping an eye on it

17:55They are too, but there's a regulator that also dictates

17:59Any any increases there's never a decrease, but I had any increases for sure. Terrific. Thank you very much

18:07Okay, um, oh looks like I can maybe call. No, okay, uh, counselor billings, please

18:16Do you mr. Chair to our ceo?

18:20I was just wondering. I think the answers. No, but I have to ask anyway because I'm not sure

18:24So just going back to the gmh. I

18:28There was a report and from electra there were risks

18:33That were in that report

18:35And so and there was also an impairment. So I was just wondering you as ceo

18:41Do you have access to the quarterly financial statements from

18:45Electra or no

18:52I threw through you chair got through to

18:54counselor billings

18:56Yes, we do participate in their quarterly shareholder earnings

18:59Meetings their quarterly

19:00Shareholder meetings and in that those meetings we do discuss

19:04The potential risks that are in that are presented

19:06We have captured those risks from a conservative perspective and transparency to you as

19:11Council as a shareholder

19:13But they're behind these words are also strategies that electra is working on to try and mitigate their the

19:19The potential losses and on the collections

19:22That they have so there is efforts. They're being exhausted by electra to maintain the shareholders interest in the overall operations

19:31Okay, so then also through you mr. Chair. So then do you have then that sort of relationship?

19:37With our appointed board member

19:41As she would sit there at the board of electra and and be voting on some of these issues

19:46So through you mr. Chair to the counselor

19:52Counselor billings the simple answer is yes. There is a relationship of course with miss Armstrong

19:58You know when these things and I think you're talking the rest you're talking about is the

20:02Is that the reference to the higher the normal customer arrears balance?

20:08There's that there's that and there was the

20:11And and then there was the the larger debt everything then would

20:16affect the

20:18The the revenue or the comprehensive revenue

20:20Yeah, so thank you. Thank you for that clary. So there is we have you know, we're not always chatting with miss Armstrong

20:27We have for these quarterly meetings that come up if it's appropriate we have a conversation and she represents wealth well

20:35But I would also say this she represents a board of 4.63 percent off the board

20:41You know, so there is there is a voice

20:44But it's not the loudest voice if that's a good way to describe it

20:47But she represents us we have a chat because we're also participating in the quarterlies

20:52And so then we're keeping an eye on both

20:54Maybe more importantly the impairment, but also customer arrears because that's also I think I would imagine if people are having trouble

21:03We still remember Guelph hydro and there might be phone calls that come into your offices as counselors

21:10So we we're mindful of those things as well. So counselor there's discussions with them and we haven't seen our eyeballs eyebrows

21:16Aren't raised at this stage. Let me put it that way with miss Armstrong

21:21Okay, well, that's good to know and then also through you mr. Chair

21:24um

21:26Is there usually the time of year and is at the end of the year when?

21:30a lecturer would announce

21:31The dividend so is it you know typically november december or when when is it announced and when would we receive the

21:392023

21:41I'm out

21:46Through chair got through to counselor billings. I'm just going to see if our staff

21:50Can assist with the timing of that. I don't recall it specifically

21:54Well about park

21:57I was just wondering if we would know before our own budget time as to we would receive for for 2023

22:04Through chair got through to counselor billings. We received their forecasting in march

22:12Okay for for 2023

22:17Yes, that's correct for march of sorry. Sorry. I apologize. Um chair got three to counselor billings

22:22We received the forecast for 2023 in march of 2023

22:32Okay, you okay counselor billings on that then so

22:36Yeah, I was just through you mr. Chair

22:37I was just wondering if there was anything that you know if it looked favorable or not for for 2023 because what we have in front of this is

22:452022

22:50Yeah, has there been a disclosure of of potential like what we're forecasting? Yeah 2023. Yeah

22:58So through you mr. Through the chair so we haven't

23:02Their forecast is their forecast. They don't see much in terms of change in regards to what's what was happened in 22

23:09But there has been sort of other conditions on the world platform

23:12That they always sort of hold into reserve to come back to so, you know as much as I can say this is because this is the appropriate report for

23:2022 you would see this and for 23 next year at that time

23:24I don't think it looks like it'll be completely offside with what you're reading here

23:28But I certainly couldn't guarantee you that it would be completely like this because there is other conditions that

23:34Come to that bigger board and then we trickle that down here to city council

23:38Okay, thank you

23:43So I've got uh, kate and then alt

23:48Thank you, uh chair guthrie through you to the ceo

23:52um, so i'm just wondering about the shareholder process

23:56Do we have any voting say on financials similar to shareholders in a publicly traded company?

24:03Or is it only through the board member?

24:09Be mr. Chair, it's just through ms. Armstrong your representative

24:13Okay, thank you very much

24:16And then alt did you want to thank you, uh mayor gretz guthrie. It's more of a point of order than anything else

24:22um when I read the recommendation we are to receive and approve the municipal holdings 2022 annual report

24:29I think the questions that have just been raised are very valuable, but perhaps it would be more appropriate for ms. Armstrong to come

24:35To us, uh, perhaps uh semi annually, uh, just to provide a report. Uh, I'm not certain this is the right place for those questions

24:47Okay, well, well, that's a takeaway in regards to mr. Armstrong and her involvement moving forward. That's that's fair. Um

24:55I thought the questions were were valid just if I have to respond as the chairs because I mean they were they were on the screen

25:02They're brought up so

25:04We'll leave it at that because the recommendation my friends is on the floor. So I I hear nothing further

25:11um any further comments

25:14Okay, the only comment that jumped out to me is

25:17That we are in a 34 percent better position than we would have been

25:21We had stayed by ourselves

25:24So that's something to highlight

25:26And with that I'll call the vote anyone against the annual report

25:31Seeing and hearing none that's unanimous. We are done this meeting

25:36Meeting two of 11 is now done

25:40Uh, let me guess

25:42The clerks after I do adjournment of this is going to require a couple minutes. Okay

25:47Uh adjournment. Who's gonna help me with adjournment on this one? I'm gonna go claustron. I'm gonna go downer

25:52And is everyone anyone against adjournment?

25:55Nobody or we're adjourned that meeting and now we'll take two minutes

25:59Take two minutes