City Council as Shareholder of GMHI

2:05Alright, good afternoon everyone. It is June the 25th 2024

2:09It is 3 30 and I am calling the meeting to order

2:13I only get to say this usually once a year as the shareholder

2:18Not meeting as council. We do have official

2:22regrets from

2:24councillor Richardson for the first few

2:28items in front of us as shareholder and

2:31Speaking of items we have

2:36Well, I better do disclosure right off the top here disclosure of pecuniary interest any general nature thereof for

2:43The items in front of us. No

2:46This first meeting is us sitting as shareholder for Guelph municipal holdings Inc. Or GMHIs we often say just

2:54server ones clear on that

2:56and

2:58We are going to start with minutes, please

3:01That the minutes of the open city council as shareholder of GMHI meetings held on June 14th

3:082023 be confirmed as recorded and without being read

3:14Councillor all will do that for me

3:16Councillor Boussadil will second that for me

3:20anything on the minutes

3:22Seeing and hearing none. I'll call the vote anyone against the minutes

3:26It's nobody that's unanimous. Thank you

3:28and now we're looking at

3:31the acting director and CEO appointment and

3:37That

3:38Do you want me to wait for things to come up on the screen or?

3:44Okay, that the report number two zero two four three oh nine title Guelph municipal holdings Inc. Director and Chief Executive Officer

3:51appointment dated June 25th

3:542024 be received

3:55And the second one is that a show shareholder of Guelph municipal holdings Inc. Ratify and appoint

4:01Jane Holmes sounds like I'm calling you down to the prices right there

4:06Jane Holmes

4:08as the acting Chief administrative officer for the city Guelph as a director and chair of the board and the

4:14Chief Executive Officer of Guelph municipal holdings Inc. for a term commencing on June 22nd

4:222024 and expiring on the day the by-law appointing a permanent full-time

4:26Chief administrative officer for the city Guelph comes into force and effect. I believe Councillor Goller put up

4:32His hand to do those two motions. Thank you and Councillor Billings is seconding those two. Is there anything on those at all?

4:40Hearing and seeing none, I'll call the vote anyone against

4:44Hearing and seeing none that's

4:47That is unanimous

4:50We also have the

4:532024 Guelph municipal holdings Inc. audited financial statements

4:58And the recommendation for that is that the Guelph municipal holdings Inc. audited financial statements for the year end of December 31st

5:052023 be received for information

5:09Would someone be willing to move that? Councillor O'Rourke, Councillor Allt will second that

5:15And he's very he's very excited to second that

5:19as you can see

5:21Is there

5:23Well, he is the chair of audit so he should be excited about like figures and money and stuff like that, right?

5:28So, uh, is there any questions, uh, on that one at all? No, okay. I'll call the vote. Is anyone against that?

5:36Nobody, okay, that is unanimous as well

5:40And now we get to the presentation of the annual report the 2023 annual report of gmhi

5:49kicking it off over to

5:51Trevor Lee and then we also have Jane Armstrong who has joined us

5:57as our appointment to the board locally, so thank you for being here, but I'll

6:02Send it over to Trevor Lee the chief financial officer

6:06Hat is on for Guelph municipal holdings Inc. Over to you. Great. Thank you so much, Mr. Mayor members of council staff and the public

6:13Either present or watching remotely as mr. Mayor indicated I normally address you as deputy ceo for corporate services

6:19But I have that other hat on this afternoon as chief financial officer of Guelph municipal holdings

6:24And I'll refer to it as gmhi going forward and I was all meant also mentioned joining me as miss Jane Armstrong director of

6:30Electra utilities Inc and your city of Guelph appointee to the electoral board of directors

6:38Gmhi's investment in electra has increased from the prior year by 3.5 million and represents an equity share of

6:44104.5 million on December 31st of 2023

6:48The cash and accounts receivable balances are similar to those in prior year and the related party transaction receivable

6:54Is the interest-free loan from the city of Guelph?

6:58For stability and budget purposes the city of Guelph benefits from the reliable prediction of dividend income from gmhi

7:05Has noted by the budgeted and remitted references on this slide

7:09gmhi manages the variability of the

7:12Distribution of dividends budgeted by electra and actual dividends paid

7:16For this reason 3.8 million budgeted and remitted dividends were received by the city when for 2023 only 3.5 million of dividends

7:25Were declared and remitted by electra to gmhi

7:29The city's investment in gmhi remains strong and increased over the year by 2.1 million

7:34To a total of 92.13 million as of december 31st of 2023

7:42gmhi's equity share, which is a measure of its 4.63 percent holdings

7:46Increased by the proportionate share of comprehensive income and reduced by dividends declared and paid the key here

7:53Is the gmhi's investment in electra continues to grow in value

7:57gmhi did benefit from an increased level of interest income due to the interest rate escalation

8:02The security deposit held on the sale of the district energy assets, which will be released in 2024

8:08Also contributed to the interest earnings potential

8:15There are remaining contractual obligations on the district energy asset sale that gmhi is committed to fulfilling

8:21Most has been distributed and the balance will be remitted in 2024 some 60 thousand dollars in 2024

8:28So as I end off my last slide gmhi and its 4.63 percent holding of electra is a contributing asset of the city

8:36And provides a predictable dividend stream that supports the city's financial position

8:41All indications received to date reinforce that the electra merger decision

8:45Has provided the city of guelph a better financial return as compared to the standalone modeling

8:51It's now my pleasure to introduce jane armstrong and ask her to come forward to address their main of our presentation items

8:57Focusing on risks community support investment and the 2024 outlook jane

9:04Thank you trevor and good afternoon

9:12electra's net income for 2023 was 139.7 million dollars and a 17.3 million

9:20Dollars higher than 2022 and above budget by three million dollars

9:25The distribution revenue increased by 13.7 million dollars year over year due to higher

9:31OEB approved rates which were driven by a higher inflationary adjustment

9:36The 2023 omna increased by 2.3 million year over year primarily due to higher contract and consulting costs

9:44Due to relocation of a new operation center and higher third party support costs due to increased pricing

9:50There is continued stability and consistency in electra's financial performance despite the impacts of the pandemic

9:57And despite a high an ongoing high inflationary environment

10:01Electra continues to grow and on average revenues have been growing by 3% a year since the formation in 2017

10:09And nibba da has grown about 6% a year over the same period

10:13Electra continues to have one of the strongest franchises

10:16Franchise areas in ontario with high customer growth potential

10:20Adding approximately 10,000 customers annually to it since its formation

10:25annually electra utilities invest approximately 300 million dollars in its distribution system

10:31Within guelph electra invested 10 million dollars in 2023

10:35And those investments included two million dollars in customer related ici growth and expansion

10:41Including the baker district redevelopment

10:44seven million dollars in restoration of deteriorating assets to ensure reliability including overhead poles

10:50switch gear and transform a renewal and 1.5 million to replace underground cables

10:57planned investment in guelph over the next three years remains relatively consistent at roughly 10 million dollars per year

11:03With ongoing focus on supporting customer growth in ici

11:07subdivisions in any required expansion

11:09And ensuring consistent reliability by maintaining infrastructure and replacing deteriorated assets both overhead and underground

11:18With respect to the potential with respect to risks

11:24Electra utilities corporation like other electrical utilities is subject to sector specific risks that must be managed to ensure sustainable returns and operational stability

11:34Those risks include regulatory

11:37Electricity distributors in Ontario regulate it and any change in electricity rates must is subject to the approval of the Ontario energy board

11:47Financial risks

11:49Specifically electricity distributors often rely on debt financing to finance their operations and capital needs

11:56The ability to arrange financing

11:58maintain strong credit ratings

12:01And respond to interest rate exposures are key considerations for the distributors business

12:08With respect to strategy electricity distribute distributors need to adapt their business models to navigate through the energy transition

12:16Towards increased electrification

12:18Which could include substantial investment in asset planning

12:22and technology infrastructure

12:25With respect to operational risk

12:27Electricity distributors operate capital intensive businesses and adequate planning is required for system reliability and efficiency

12:35Electra utilities has adopted an enterprise-wide approach to risk management, which is governed by its enterprise risk management program

12:43Electra utilities inks erm program provides routine risk review and integrates risk findings in ongoing business planning and strategy development

12:55In 2023, Electra continued to provide support to our community

13:00The electric cares community support program touched many frontline agencies and institutional partners in Guelph

13:07Focused in food on food security issues support for youth and families and edni programs in disadvantaged communities

13:15Our total investment in community support programs in Guelph

13:19totaled approximately 130 000 for the year

13:22The investment has been renewed for 2024 as we continue to support frontline social service agencies in Guelph

13:31That the list of organizations supported by Electra include the following

13:35Second harvest Canada food for food for kids Guelph

13:40Hope house Guelph

13:41Michael house pregnancy and parenting support services

13:45rural city mission Guelph general hospital foundation

13:49Windham house out on the shelf

13:51E3 global community connections learning disabilities association of wellington county

13:57Guelph black heritage society pollinator partnership canada

14:01Walk a mile in their shoes

14:03Coldest night of the year and Guelph community foundation specifically the grove hub youth services

14:14Electra utilities continues to address increasing customer electricity demands by reinforcing its power grid in Guelph

14:21In 2023 Electra invested four point two million dollars to construct a renew infrastructure in the city of Guelph

14:28Improving our electrical grid will provide more reliability and supports city of Guelph city growth

14:34Allowing our residents and our businesses to thrive

14:37Electra continued to deliver work focused on asset renewal and customer driven work

14:42impacting 3 000 customers in Guelph by investing

14:471.5 million to replace underground cables in the southwest area of Guelph

14:51And 2.7 million to review to renew overhead poles in the southwest area of Guelph

14:57Electra's sustainability commitment means creating environmental social and economic benefits now and for the future

15:04And that is why Electra repairs and re rejuvenates its equipment where possible reducing emissions and costs versus replacement

15:13with respect to

15:152024

15:16The evolving business environment is creating both opportunities and challenges

15:21Opportunities are materializing from decarbonization and the energy transition

15:26For example electrification of transportation and various manufacturing processes

15:31Angus advocacy has increased in importance and Electra is addressing issues both with the provincial and the federal governments

15:39Electra's strategy is resilient and it continues to guide Electra towards becoming a customer centric integrated energy services company

15:48Thank you for the opportunity to present to you. I'd be happy to answer any questions

15:53Thank you councillor Busuttil, please

15:55And then councillor work. Thank you. Thank you very much for the presentation very detailed

16:00lots of information

16:02There was something that you said in in your presentation earlier on about baker street

16:07investments and I'm wondering if the baker street investment

16:11If it's grid investment and if it's coinciding with kind of downtown redevelopment

16:16Is that kind of the working together of that would that? Yes? That would be my understanding of how that yes

16:22We're we're dealing with additional services to that area as you are developing it out and that would be the grid investment there

16:30Yes, great. Wonderful. Thank you. Pleasure. Thank you

16:33councillor or work, please

16:35Then I have a question as well. Thank you mega three three you I have a couple questions

16:39And they start fairly specific and then they sort of branch out. So the first one is with respect to the utility billing transition

16:46so in uh april of 2023

16:51Sorry january 2023

16:53So we have a staff report that says electra is moving out of the

16:57You know verifying meters billing etc

17:00And the at the financial estimate at the time was that there that cost of billing and collection coming back to the city from electra

17:08Could range between three and four million and then that there would be um

17:12ongoing operating costs. So I'm just wondering what the status of that is

17:18So are you are cancer? Are you referring to water billing? No

17:22No, so it's the meter reading and the invoicing and collections of of

17:30Water rates. No of

17:33Electrical electricity rates. Okay, thank you. Right. So

17:37Electrical no longer support utility billing as part of their core business

17:41So the city will have to do that, right? Well, I think I think electra is still undertaking

17:46It's it's billing for electrical rates, but

17:50Electra was providing

17:52water billing meter reading for

17:55wealth and

17:57two or three other

17:59Municipalities and the decision was made

18:02That for a number of reasons business reasons that it would not be a good business decision for electra to continue

18:09So my understanding is that there's been an extension of time granted to the municipalities to allow them to

18:16move to taking on that on their own on their own behalf

18:20I'm not sure where that extension is, but that's my understanding of

18:24What is unfolding there? Okay. I appreciate the clarification. Do we know what the status of that project is?

18:30I would have to ask the city actually. Yeah

18:34Let's go to let's go to trevor

18:36Lee on that because I they have they have been there's like a committee that's been working

18:41On this issue still so go ahead turn. Thank you through the chair to councillor roark

18:45There is as the chair indicated there is a working group within staff electra is working

18:50collaboratively with us

18:52Every step that we're addressing in the need for extensions electra is complying and assisting with us as

18:59Our guest has indicated there are a number of other municipalities within the same

19:03Processes us. I would I would also add they're the larger of the utilities

19:08So they're driving a lot of the requirements for the extensions so that we can find a solution that meets all the municipal needs

19:16Okay, thank you and through you

19:18Mayor Guthrie so we can expect

19:21When there's a resolution to that we expect that to come back to council or to

19:26To council I imagine not gmhi

19:29Through the chair to councillor roark

19:31It would come back to the board of gmhi for consideration and then ultimately through to council for your awareness and adoption as shareholders

19:40Council as a shareholder great. Okay. Thank you

19:43And through you mega three. I'm just curious miss arms strong about

19:47What the future outlook is on rates? So there was a

19:50A rate increase and we're seeing that there was a good increase in the income at electra this year

19:56Which which we want as shareholders of gmhi

20:00But i'm just wondering what

20:02Reading the tea leaves

20:04Will those future future income for electra is it expected to be driven by increased use or by increased rates?

20:12Or by you know investment income

20:16What do you think that looks like

20:21And sorry

20:25on now

20:27It's more certainly would be a combination of those I and

20:31I'm afraid I can't read tea leaves

20:35But I can you know at some point as as is required there probably will be rate increases

20:41But you can expect as well that the income is also being driven by the competitive areas of the business where as you've

20:49Heard today and I think as you'll see in our annual report

20:52There's additional investments being into that being made into those areas which is also contributing to the income

20:58So it's it's you know, we are trying to diversify our income streams so that we

21:03Can you know preserve a strong business for the shareholder, but certainly

21:08um

21:09Rates I you know that that's going to be it's they're not going to continue to be

21:14Stagnant they can't be because investments will have to can be continue to be made as we as we seek

21:20As we move forward with electrification

21:22There's going to be further investments that will need to be made across the board

21:26To to assist with that as we move forward. Okay. Thanks very much. You're welcome

21:33Thank you, and I was about to ask another question, but I thought I saw councillor altan go up

21:38Okay, you go first. Thank you, mayor. Guthrie. I'll turn off my screen just to make certain I don't get any

21:43problems

21:44Thank you, Ms. Armstrong for for being here today

21:48My questions, hopefully are just simple ones

21:51You made mention of I think approximately three to four million dollars investment in the wealth area from electra

21:58And my question is that investment would have occurred regardless

22:03Whether wealth was a shareholder or not. That's the question

22:10Uh, I I are you talking about capital investment? Yeah, I believe mr. Lee made reference to it

22:16Yeah, so there was a total of there was a total of

22:1910 million dollars of capital investment in the wealth area in the last year

22:25And

22:27It you know it as this

22:29As this is an area in which electra operates

22:33In order to maintain reliability and service to its customer

22:37It's going to have to invest

22:39In and ensure that it's its capital is operating

22:44Appropriately I I would take your point that may be

22:48Independent as to who as to whether wealth is a shareholder or not

22:51It's the obligation of the of the of the utility to ensure that it's

22:56That it is making appropriate investments in its capital

22:59Yeah, and thank you very much the next question

23:02Falls on that and perhaps it's moved but um, I am wondering whether there actually is a value added benefit

23:10as a consequence of wealth being the shareholder on that type of uh, uh,

23:15investment is there a greater efficiency is there?

23:19Perhaps a greater opportunity because we are local as well as being part of a larger utility as well

23:29Uh, well, I mean, it's certainly the value to to the the shareholder in part is the the

23:36Dividend flow to the shareholder

23:38um, I think the fact that you have a

23:44Representation at the board although, you know, it's one has to be clear that a

23:49Director while sitting as a director has to act in the best interest of the company with regard to the

23:55With of the interests of all of the shareholders and other stakeholders

23:58But I think having that representation there is is of assistance to be able to

24:04put forward the the interests

24:06in the perspective of the city, but uh, normally the the board doesn't directly get involved into the

24:14operational decisions as to what

24:16Capital of the investment specifically are being made we want to ensure

24:20Overall that appropriate investments are being made and then the reliability across the service territory is being maintained

24:28Okay, thank you. I appreciate your answers to that. The next question is a really simple one and you already know about this other than my name

24:38Those are the really simple one

24:41You already helped me with something like this. Uh, uh, when there are significant

24:47Billing errors as I experienced in one situation. Is it most appropriate for

24:54People to contact you through their counselors

24:57Or did I just get lucky by jumping the queue? Well, I think if counselors receive

25:04concerns expressed by customers with respect to

25:07Service or any other matter. I think it's it's quite appropriate for you to bring that forward to me and then I can certainly pass it on to

25:15Electra and and hopefully to the right area there for a response. I think that's quite appropriate

25:21Great. Thank you very very much

25:23You're welcome. Thank you

25:26Thank you. And my only question was and this can be a takeaway. I sorry I didn't give you the heads up on this

25:31But I've been wanting to ask for a while. Is there metrics that are

25:35captured when

25:37Especially for new businesses. You said the ICI sector as an example

25:42or other

25:44You know customer service related for new infrastructure from a lecture that has to be has to be done other metrics that are

25:51captured about the time frame of that

25:55From when we or custom yeah us as a city perhaps

25:59But customers are looking for that as part of their build out to get their business running to get their

26:05To get their subdivision done whatever it is

26:08Is there is there metrics that are found within your annual?

26:12um

26:13Capture of those metrics to determine how long of a wait it is for people to get that done or yeah

26:21I

26:23I let me take that back

26:24I think I think there is but I would like to really get a specific understanding of that and I can certainly

26:31Pass that back through mr. Lee to you or directly to you. That's I'm happy to do that

26:36Yeah, okay. Thank you and I can I can send it to council too. So that's great. Okay

26:39Um, that's it. No more questions and thank you very much to both of you. We appreciate it. Thank you. Um with that

26:47All right, maybe maybe I'll uh, just look for

26:55Yeah, there's no motion for that. Sometimes we do motions to receive the presentation, but

27:02Yeah, I think we'll do that. I think if you don't mind

27:04I'll I'll just have a motion to receive the presentation, please

27:07Uh councillor downer and councillor Allt will will move that for me and uh hearing and seeing nothing further

27:13I'll call the vote on that anyone against

27:17Nobody great, uh, how about adjournment?

27:21Councillor chew and downer will second that is anyone against adjournment

27:28Nobody that's unanimous. Thank you so much

27:30That's great

27:33Move that one over there

27:36We are basically on time clerks. Do I just continue to roll or should I officially wait the three minutes

27:44To start I think we should probably wait, right? Yeah. Okay. Good. So we will take a two minute

27:49Break three minute break. Uh, so we start the gulf junction railway shareholder meeting right at four o'clock. So

27:56Take a few moments. We'll be right back. Thank you