Now you will understand
- why we have to pay the 86% rate increase for WUC
- why there are increased management fees paid by WUC to Enwin
- why there are increased dividends from Enwin to the City and
- why there are rate increases for Enwin even though it is making a profit.
Why, we might even begin to understand why Enwin paid so much money in fees to Councillors that allowed them to boost their salaries so high presumably because of all of the work they had to do at Enwin meetings.
Stop complaining. Don’t you understand the investment opportunity Eddie has created on the backs of taxpayers. So you have to miss a meal or a mortgage payment. Stop moaning and groaning since we will have cash for Eddie’s dreams, huge amounts.
THINK BIG and GO BIG OR GO HOME. Heck folks, get with the program:
- “Other cities are putting forward massive projects with vision. Today, here, instead of such vision, we have a receptor sewer project.”
It is hardly a shocking revelation. I had predicted that we would see our various City subsidiaries disposed of so that our politicians could squander the money in order to be re-elected. Just one example is the BLOG March 06, 2009 “The Windsor P3 Set Up.”
Oh I am sorry, dear reader, I neglected to tell you that there is an Agenda item at Council to hire a Consultant, yet another one, to help us decide if we should sell Enwin. And he will recommend we should do so. Bet on that one!
By the way, the Item is buried as “Item 24 Windsor Canada Utilities Ltd. – Shareholder Considerations” on Wednesday’s Agenda, not the regular Council night too, where the main topic will be the City’s Budget. That should ensure that no one is the wiser. Nice subject heading too that should not let the cat out of the bag. Shades of the infamous Agenda Item #5
Now that you have seen in the canal fiasco in vivid detail how Eddie really operates, you will understand why he made these remarks in the 2007 State of the City speech. He was setting us up for what would happen, so we could applaud his genius. He really is a good technocrat:
- “For the past four years, we have been working extremely hard, undertaking a similar review at our Enwin Group of Companies, and the Windsor Utilities Commission.
Enwin had strayed into areas it should never have been involved with in the first place. It simply didn’t have the resources necessary to manage all of those non-core activities.
The staff at Enwin was distracted away from their core business – delivering hydro and water services to our customers…
With employees and management working with the Board, Enwin underwent a massive transformation…
New managers and leaders came on board.
The Boards of Directors were streamlined.
We changed and reduced the number of companies, by merging utilities and power lines…
Since 2004, and as a result of the service delivery review, we have reduced Enwin’s debt by $20 million dollars…
Reduced its payables by $5 million dollars...
And paid you – the shareholders of the City of Windsor – a $3 million dollar dividend this year.”
A short time later Gord wrote in a column to confirm what Eddie said:
- “Enwin was a broken organization with a defective top-down culture which stifled employee initiative. It lacked entrepreneurial skills yet gambled, with our money, that it could become a corporate player with investments in hot water tank sales, billing, telecommunications, laboratory testing and training. Heads have since rolled and it's now refocusing on core responsibilities, delivering water and electricity.”
Why Gord even allowed Max Zalev to give himself a big pat on the back for his efforts:
- “Now, three years into cleaning up this mess, Francis, Zalev and others are being eviscerated for taking the unpopular actions others dodged over the years.
"They're shooting the messenger. We're the ones finding all this stuff out and they want to kill us," sighed Zalev. "That's OK," he added. "I come from a rough and tumble business and I'm used to getting banged around."
That's just as well, because no matter how obvious and pressing the need, people will never say thanks for raising prices and making their lives more difficult.”
But was there more behind this, something we were not being told? Now I believe there is. It just took time for it to be played out. And Max is correct---I am not going to thank him for increasing my rates and not telling me why if I am correct. It will just get more painful financially down the road.
Of course, Gord told us in August, 2007 what was going to happen, or rather it was the secretive insider “Jim” who told us the real scoop through Gord. Of course Eddie was our hero :
- “It would take immense political courage, but the only real fix for the Windsor Utilities Commission and Enwin might be to blow up these bloated organizations and start over.
That's my gut reaction after listening to a litany of horrors from a former administrator who packed it in disgust after more than 35 years with WUC.
This individual -- we'll call him Jim -- says those playing the blame game over punishing rate increases to replace rusty old water mains are missing the main point -- that WUC has for decades been a consumer's worst nightmare, an old boys' club rife with featherbedding, cronyism, inappropriate hiring and institutionalized inefficiencies...
The way to really fix this mess, said Jim, would be to shut down WUC and Enwin Powerlines operations and hand them over, on contract, to the private sector to run on a turnkey basis.
"Make it someone else's headache," he argues. Sadly, he knows that's a non-starter. It might make eminent sense. But it will never receive serious consideration in a labour-dominated city that goes bonkers -- remember the parking meter enforcement battle -- at the very mention of contracting out.’"
Now you will understand exactly why these steps I mentioned were taken, steps that upset many people in town but was crucial if Enwin was to be "blown up" and for big bucks! The big one was the WUC increase. What does WUC have to do with Enwin you might say:
We learned in the past that
- “The WUC pays Enwin millions of dollars per year in management fees. WUC employees are also employed at Enwin, including WUC acting general manager Max Zalev, who is also CEO of Enwin Utilities. WUC finance director Victoria Zuber also holds the position of chief financial officer for Enwin Powerlines and Sylvia deVries is the spokeswoman for WUC and Enwin.
We also learned that:
- “In 2007, Enwin received an $8.6-million management fee from WUC, marking a $1.3 million one-year increase.”
That is how money flowed from taxpayers to WUC to Enwin to the City to show how profitable Enwin is, to dazzle possible investors. As if this will fool someone who is sophisticated in this type of transaction.
How about this about profits and rate increases:
- “Enwin gives $4M to city, ups rates
02-14-2008
Enwin Utilities will hand over $4 million in dividends to its sole shareholder, the City of Windsor -- $1 million more than last year -- even as it increases rates to its customers.
Citing inflation and capital costs, the utility asked for and recently received Ontario Energy Board approval to hike hydro rates 2.1 per cent.
The increase is about half a percentage point higher than the average across Ontario, said Vanda Wall, spokeswoman for OEB...
Enwin's decision to turn over an additional $1 million to the city at the same time that it asks for a hydro rate hike drew fire Wednesday from taxpayer watchdog Al Nelman. "It's Deceit 101 for the poor taxpayers."
"If (Enwin) is making all this money, then asking for another increase doesn't make sense," Nelman said.”
Oh Al, of course it all makes sense. Now. How about this too:
- “Enwin seeks rate increase; Profitable utility urged to resist raising costs for customers;
04-01-2009
Enwin Utilities should not seek a rate increase while it's making a profit and returning millions in dividends to the city, Coun. Alan Halberstadt said Tuesday.
Enwin is asking the Ontario Energy Board to allow it to increase rates by nine per cent for service delivery charges...
"We saw how people reacted to an increase in water rates. I don't think the reaction will be very positive," Halberstadt said…”
The story went on:
- “Joe Lafontaine said Ontario needs to repeal the rules and push hydro companies back into non-profit operations.
Hydro operations were handed over to local municipalities in 1999.
Lafontaine said that too often, municipalities look to tap into hydro company dividends for municipal needs and pursue even greater profits at the expense of ratepayers, he said.
"If they make more money, they get bigger dividend cheques," Lafontaine said. "They will often go as high as they can within the guidelines of OEB."
Fat chance that will happen Joe. It is the Ontario Government that is driving what is going on with their theory being bigger is better:
- “the Ministry of Finance of the Province of Ontario also recently announced the extension of the Electricity Transfer Tax Exemption for publicly owned utilities to October 16, 2009. This measure is being put forth in order to further encourage efficiencies and promote consolidation in Ontario’s electricity sector. Essentially, the exemption applies to publicly owned utilities when they sell electricity assets to other publicly owned utilities in Ontario. This exemption enables the municipality to avoid a tax payable of 33% of the municipality’s interest in the property transferred to any other entity. In order for the exemption to apply application for Ontario Energy Board approval, if needed, must be filed before October 17, 2009.”
Finally, thanks to Councillor Halberstadt’s BLOG, we learned that the Ontario Energy board allowed an Enwin rate increase:
- “As a result of this Decision and Rate Order, the portion of the bill associated with the cost to deliver electricity will increase by approximately 5.8% or $2.25 per month for Enwin’s residential customers using 1,000 kWh per month. In its initial application EnWin requested an increase of approximately 9.7%. The delivery portion represents about one-third of the total bill.”
What is this all really about. Why do we need such big rate increases at WUC and Enwin?
It is simple. Taxpayers are forking over their good hard cash to build up the profits at Enwin so it can be sold at a high price to an investor, whether another utility or to a private firm. That is already happening in the County!
As the Administration Report so nicely puts it:
- “The dividends have grown from a level of approximately $1.7 million annually in 2005 to a level of $4 million annually in 2008. See table below relative to the dividend payout history of WCUL…
Additionally, during this same period WCUL has retained earnings and reinvested within the operations to further grow the company. This is evidenced by the growth in the Investment/Equity of the company from a level of $84 million in 2000 to a level of $103 million for 2008…
Any analysis of strategic options would need to consider these historic dividend and equity return levels within the context of future return levels expected from the sale of such an asset…
if one looks to the last three year period as indicative of the expected return, than one would need to invest $230 million in order to achieve an annual return of $11.5 million. These calculations are simply for illustrative purposes and do not in any way reflect or attempt to quantify the expected valuation of WCUL.”
There it is. The starting price for a sale at a quarter of a billion dollars!
Taxpayer money in the guise of rate increases supposedly has made Enwin very profitable. It can be sold at a much higher price. We should be thrilled right…all of this money coming in. Why Administration tells us:
- the following options could be considered relative to the proceeds from the sale:
---Establishment of an Endowment Fund.
---Set up Reserve Fund and utilize proceeds from the sale over a defined period to assist in transitioning through the current economic challenges facing the City.
---Utilize the proceeds from sale for major investment in infrastructure to spur local economy.
Of course a fourth option is to let Eddie do whatever he wants with it as he tried with the canal project but that is just me being mean.
Just remember as well, if someone pays that high amount, guess how high the water and electrical rates will be in the future to pay for this purchase price. Oh, by then, Eddie will no longer be our Mayor so you will not be able to blame him! Go complain to the new Council who will wash their hands of it because the old Council did it. We went through that charade with the WUC fiasco fingerpointing.
Don’t expect that Enwin will be “sold.” People would get too upset. Eddie will follow what Kwame said in the failed Tunnel deal. A P3 is a much better route. We will still “own” Enwin although the private investor will probably have total control over it and the rate-setting for the next 75-99 years. We know how good a negotiator Eddie is. He gets the cash now and we get to pick up the pieces later.
I could say that I am “shocked” by all of this “electrical utility” manoeuvering, but I am not. The light bulb went on in my head a long time ago. I just have more insight now!
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