Editor's note: Mr. Rennick is writing in response to the BayToday story Invest North Bay conducting closed meetings in violation of Municipal Act says Ferris.
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Mayor McDonald:
Recent revelations illustrate the folly of allowing taxpayer owned and supported institutions like Invest North Bay to operate in virtual secrecy with no effective public oversight.
North Bay Hydro Distribution Limited (NBHDL) and its related companies have been in a similar “move along, nothing to see here” mode regarding their operations since their inception in 2002. Board meetings are not open to the public nor open to the media. North Bay Hydro Services (NBHS) has spent over $100,000 in legal fees unsuccessfully attempting to avoid FOI requests to supply financial statements and other basic information that should be available to taxpayers as a matter of course. While this figure pales in the light of the amounts wasted at Invest North Bay, it is perhaps more insidious.
At this time, NBHDL is applying for another rate increase as of May 1, 2021. The rate-setting process is a Ponzi scheme that overcharges North Bay customers, who are the company’s owners, and then pays tax to the Province on the amount of the overcharge. The overcharge has been averaging approximately $2 million per year and will amount to over $2.5 million this year.
The above information has been shared numerous times with you and council members who are the directors of the parent company North Bay Hydro Holdings Limited (Holdings). It seems you and council are content to penalize taxpayers at any cost in order to continue the practice of back door taxation in the form of after-tax dividends. These so called dividends are merely a return of a portion of our own money and have been supplied by ratepayers through their hydro bills.
It is also apropos to mention another financial bombshell that awaits citizens.
This involves the purchase of Espanola Hydro by NBHDL. I was an intervenor during the OEB application process and soon became aware that this was merely an empire-building exercise on the part of NBHDL and that it was detrimental to North Bay citizens. The application was filled with descriptions of the many benefits that would accrue to Espanola but sadly lacking in any benefits for NBHDL or its customers.
The application strangely contended that incremental one-time transaction and transition costs were expected to be approximately $600k but because these costs were not to be included in the rates, they would not be funded by ratepayers. In response to a request for an explanation, NBHDL responded that the money would be coming from retained earnings which I presume they are unaware originally came from ratepayers in the same manner as all the funds NBHDL receives.
I submitted an FOI request to Holdings for details of the information that senior management at NBHDL provided to you and council in order to secure the approval for this purchase. The request has been denied by Holdings and is now at the adjudication stage with the Privacy commissioner.
Espanola is a town situated on the other side of Sudbury, over two hours and 200 kms from North Bay. Espanola Hydro has approximately 3,200 customers and was purchased for $8 million by a newly incorporated subsidiary of Holdings. The funds borrowed by the new company have been guaranteed by NBHDL, read North Bay taxpayers, and will be paid exclusively out of rates received from Espanola customers until the next step in the process in 2022.
The next step in this process is to form a further company and amalgamate both the new company and NBHDL into it. This will provide no operational savings to North Bay customers but the new delivery rates will include principal and interest payments on the $8 million loan and North Bay customers will be contributing to those payments. In addition, North Bay customers will be included in paying the lion’s share (90%) of the costs to upgrade Espanola’s system. These costs appear to be substantial based on the information contained in the application which includes the following statement: “However, the substantial infrastructure requirements of ERHDC over the next 10 years are primarily related to substation rebuilds”
There is no upside for North Bay hydro customers in this deal which was approved by yourself and all council members except Councillor King. Examination of the details provided to obtain the original approval of directors will determine if they were misled by senior staff regarding the benefits of this purchase. The details of the approval process need to be made public sooner rather than later. Let’s not have another Invest North Bay, there is still time to stop this process before more damage is done.
D. D. Rennick CPA, CA
North Bay
