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170110 Council Budget AGDTable of Contents Agenda 2 Minutes, December 1, 2016 Minutes, December 1, 2016 5 2017 Budget Package Section 1 - Introduction & Overview 11 Section 3 - Finance 28 Section 4 - Human Resources 38 Section 5 - Operations 45 Section 6 - Recreation, Culture & Parks 72 Section 7 - Fire Services 89 Section 8 - Building, Planning & By-Law 105 Section 9 - Economic Development & Marketing 115 Section 10 - Capital Budget Overview 124 Section 11 - Long Term Debt Repayment 130 Section 12 - Consolidated PSAB Summary 132 FIN 17-03, Tax Rates Explained FIN 17-03 133 FIN 17-04, Funding the Asset Management Plan FIN 17-04 135 FIN 17-05, Reserves FIN 17-05 136 Reserve Policy 138 OPS 17-03, White Paper – Business Case for 1.0 FTE Mechanic OPS 17-03 141 RCP 17-02 – Budget Issue Paper – Utility Cost Increases RCP 17-02 ? Budget Issue Paper - Utility Cost Increases 143 The Mysteries of Electricity Pricing in Ontario 146 Guide to Electricity Pricing in Ontario 152 By-Law 4073, To confirm the proceedings of council By-Law 4073 168 1 1. Call to Order 2. Adoption of Agenda Proposed Resolution #1 THAT the Agenda as prepared for the Budget Council meeting of Tuesday, January 10, 2017, be adopted. 3. Moment of Silence 4. Disclosures of Pecuniary Interest and the General Nature Thereof 5. Adoption of Council Minutes of Previous Meeting 5.1. Minutes of the Meeting of December 1, 2016 Minutes, December 1, 2016 Proposed Resolution #2 THAT the Minutes of the December 1, 2016 Budget Meeting, be approved. 6. Overview of the 2017 Proposed Budget – David Calder, CAO 7. 2017 Draft Budget – Dave Rushton, Director of Finance 7.1. 2017 Budget Package Section 1 - Introduction & Overview Section 3 - Finance Section 4 - Human Resources Section 5 - Operations The Corporation of the Town of Tillsonburg BUDGET COUNCIL MEETING Tuesday, January 10, 2017 9:00 AM Council Chambers 200 Broadway, 2nd Floor AGENDA 2 Council Meeting – Agenda 2 Section 6 - Recreation, Culture & Parks Section 7 - Fire Services Section 8 - Building, Planning & By-Law Section 9 - Economic Development & Marketing Section 10 - Capital Budget Overview Section 11 - Long Term Debt Repayment Section 12 - Consolidated PSAB Summary 7.2. FIN 17-03, Tax Rates Explained FIN 17-03 Proposed Resolution #3 THAT Council receive Report FIN 17-03, Tax Rates Explained, as information. 7.3. FIN 17-04, Funding the Asset Management Plan FIN 17-04 Proposed Resolution #4 THAT Council receive Report FIN 17-04, Funding the Asset Management Plan; AND THAT council directs staff to bring forward a capital budget in the fall using the amount of the increase in property value assessment (growth) towards funding the Asset Management Plan. 7.4. FIN 17-05, Reserves FIN 17-05 Reserve Policy Proposed Resolution #5 THAT Council receive Report FIN 17-05, Reserves; AND THAT Council directs staff to bring forward an updated reserve policy; AND FURTHER THAT Council accepts the general reserve fund to be reported through the use of proposed reserves. 3 Council Meeting – Agenda 3 7.5. OPS 17-03, White Paper – Business Case for 1.0 FTE Mechanic OPS 17-03 Proposed Resolution #6 THAT Council receive Report OPS 17-03, White Paper – Business Case for 1.0 FTE Mechanic as information. 7.6. RCP 17-02, Budget Issue Paper – Utility Cost Increases RCP 17-02 - Budget Issue Paper - Utility Cost Increases The Mysteries of Electricity Pricing in Ontario Guide to Electricity Pricing in Ontario Proposed Resolution #7 THAT Council receive Report RCP 17-02, Budget Issue Paper – Utility Cost Increases, as information. 8. Council Budget Discussions 9. 2017 Tax Levy Resolution Proposed Resolution #8 THAT Council receive the 2017 Budget Package; AND THAT Council approve a tax levy rate increase of 3.3% and the tax supported operating budget of $12,865,100.00 and capital budget of $1,206,600.00. 10. By-Laws By-Laws from the Meeting of January 10, 2017 Proposed Resolution #9 9.1 THAT By-Law 4073, To confirm the proceedings of Council at its meeting held on the 10th day of January, 2017, be read for a first, second and third and final reading and that the Mayor and the Clerk be and are hereby authorized to sign the same, and place the corporate seal thereunto. 11. Adjournment Proposed Resolution #10 THAT the Council Meeting of January 10, 2017 be adjourned at _____ p.m. 4 ATTENDANCE Mayor Stephen Molnar Deputy Mayor Dave Beres Councillor Maxwell Adam Councillor Penny Esseltine Councillor Jim Hayes Councillor Chris Rosehart Councillor Brian Stephenson Staff: David Calder, CAO David Rushton, Director of Finance/Treasurer Janelle Costantino, Manager of Finance Rick Cox, Director of Recreation, Culture & Parks Kevin DeLeebeeck, Director of Operations Jeff Smith, Fire Chief Tricia Smith, Deputy Clerk Regrets: Donna Wilson, Town Clerk 1. Call to Order The meeting was called to order at 4:01 p.m. 2. Adoption of Agenda Resolution #1 Moved By: Councillor Hayes Seconded By: Councillor Rosehart THAT the Agenda as prepared for the Council meeting of Thursday, December 1, 2016, be adopted. Carried The Corporation of the Town of Tillsonburg BUDGET COUNCIL MEETING Thursday, December 01, 2016 4:00 PM Council Chambers 200 Broadway, 2nd Floor MINUTES 5 Council Meeting Minutes, December 1, 2016 2 3. Moment of Silence 4. Disclosures of Pecuniary Interest and the General Nature Thereof There were no disclosures of pecuniary interest declared. Councillor Adam joined the meeting at 6:15 p.m. 5. Adoption of Council Minutes of Previous Meeting 5.1. Minutes of the Meeting of November 22, 2016 Minutes, November 22, 2016 Resolution #2 Moved By: Councillor Hayes Seconded By: Councillor Rosehart THAT the Minutes of the Budget Council Meeting of November 22, 2016, be approved. Carried 6. Budget Requests Limited to 15 minutes each 6.1. Tillsonburg District Chamber of Commerce Budget Request 2015 Financial Statements 6.2. Tillsonburg & District Multi-Service Centre Budget Request Cover Letter Multi-Service Centre Statistics: Tillsonburg 2015/16 Financial Statements 6.3. Tillsonburg Station Arts Centre Budget Request Proposed Service Agreement 6.4. Town of Tillsonburg Cultural Advisory Committee Budget Request Cover Letter 6 Council Meeting Minutes, December 1, 2016 3 6.5. Big Brothers Big Sisters of Ingersoll, Tillsonburg & Area Budget Request Cover Letter Municipal Grant Request 2015 Financial Statements 6.6. Lake Lisgar Revitalization Committee Budget Request 2015 Financial Statements 6.7. Heritage, Beautification & Cemetery Advisory Committee Budget Request Multi-Year Plan A recommendation was made for the allocation of resources to the Parks, Culture & Recreation 2017 Budget for beautification efforts in the Town. 6.8. Upper Deck Youth Services Budget Request Cover Letter 2014-2016 Financial Statements 6.9. Cross Country Jeepers Budget Request Cover Letter 6.10. Tillsonburg Police Services Board Budget Request 2015 Financial Statements 6.11. Tillsonburg Business Improvement Area Budget Request 2017 BIA Business Plan 2017 Budget 2015 Financial Statements Councillor Stephenson left the meeting at 6:50 p.m. 7 Council Meeting Minutes, December 1, 2016 4 6.12. Tillsonburg Turtlefest Budget Request 2016 Financial Statements 2015 Financial Statements Applicant to provide a breakdown of the $5000 in costs for incorporation to Council. 6.13. Family Day Organizing Committee Budget Request 2016 Event Report 2015 Financial Statements 6.14. Community Transportation Steering Committee Budget Request 2017 Budget & 2015-16 Financial Statements MTO Community Transportation Pilot Program grant ending March 31, 2017. A recommendation was made for the Town to apply for Provincial Gas Tax Funds to provide support for the continuation of the Community Transportation Pilot Program. A request was made for pre-budget approval. Council requested information on community support for the continuation of the pilot program as part of the committee’s next report to council. Staff to follow up with Council in regards to the availability of 2017 Provincial Gas Tax funding. Resolution #3 Moved By: Councillor Adam Seconded By: Deputy Mayor Beres Notwithstanding any circulated resolutions on the Budget Agenda of December 1, 2016, be it resolved that the Community Budget requests as presented be received as information. Carried 8 Council Meeting Minutes, December 1, 2016 5 6.15. FIN16-35 2017 Community Budget Requests FIN16-35 2017 Community Budget Requests 2017 Community budget request summary sheet Resolution #4 Moved By: Deputy Mayor Beres Seconded By: Councillor Adam THAT Council receives FIN16-35 2017 Community Budget Requests as information; AND THAT any received community grant requests be referred to the 2017 budget deliberations. Carried 7. Council Budget Discussions 8. By-Laws By-Laws from the Meeting of December 1, 2016 Resolution #5 Moved By: Deputy Mayor Beres Seconded By: Councillor Adam 8.1 THAT By-Law 4062, To amend Zoning By-Law Number 3295, as amended (ZN 7-16-07), be read for a first, second and third and final reading and that the Mayor and the Clerk be and are hereby authorized to sign the same, and place the corporate seal thereunto. Carried Resolution #6 Moved By: Deputy Mayor Beres Seconded By: Councillor Adam 8.2 THAT By-Law 4061, To confirm the proceedings of Council at its meeting held on the 1st day of December, 2016, be read for a first, second, third and final reading and that the Mayor and the Clerk be and are hereby authorized to sign the same, and place the corporate seal thereunto. Carried 9 Council Meeting Minutes, December 1, 2016 6 9. Adjournment Resolution #7 Moved By: Councillor Hayes Seconded By: Councillor Rosehart THAT the Budget Council Meeting of December 1, 2016, be adjourned at 7:58 p.m. Carried 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 TOWN OF TILLSONBURG2017 Business PlanHuman ResourcesTuesday, January 10, 201738 2HR ServicesRecruitmentSalary AdministrationHRISBenefit AdministrationPolicy & ProceduresEmployee RelationsHealth & Safety/WellnessLabour Relations2017 Business Plan | Human Resources39 32017 BusinessObjectives2017 Business Plan | Human ResourcesItemOwner Budget Value Target Date1.5 % Costing of Living IncreaseHR Manager $72,000 Q2-Q4Health & Dental renewal increaseHR Manager $43,000 Q1-Q4Payroll deduction increase (CPP, EI, WSIB)HR Manager $34,000 (FT) Q1 – Q4Compensation Review – Pay EquityHR Manager $10,000 Q4Health and Safety/Management TrainingHR Manager $5,000 Q1-Q4Succession Planning Program Training and DevelopmentHR Manager $2,500 Q1-Q440 4Risks•Competitive compensation pressures. •Changing health and safety legislation. 2017 Business Plan | Human Resources41 5Opportunities•Increasing the cost of living supports recruitment and retention. •Succession Planning program to provide for business continuity. •Compensation review to ensure we are continuing to remain in compliance with the Pay Equity Act.2017 Business Plan | Human Resources42 6Future Departmental Directions: 3 year outlook• 2018 to 2020• Continuation of Succession Planning Program2017 Business Plan | Human Resources43 7Human Resources2017 Business Plan | Human Resources2016 2017Total FTE Requirements127.32 130.79Change from previous year- 3.47Department FTE ChangeBuilding & By-Law 0.33Clerk’s Department 0.33Economic Development 0.10Hydro Operations 2.00Operations 0.16Recreation, Culture & Parks 0.552017 FTE Changes by Department44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 2016 Sub-Total Total 2017 Sub-Total Total Budget Budget REVENUES Operating ($18,815,300) ($19,732,342) Capital (3,418,800) (7,277,900) LESS: Transfer from other funds 1,111,000 2,104,900 Proceeds on debenture issue 1,007,300 861,500 Proceeds on user pay debtenture issue 625,000 TOTAL REVENUE -13,278,200 (20,115,800) -8,863,042 (24,043,842) EXPENSES Operating 18,675,300 19,732,443 Non-Tangible Capital 558,700 110,000 Capital 5,322,000 7,167,900 LESS: Transfer to other funds (709,500) (365,800) Capital Expenses (5,322,000) (7,167,900) Debt Principal payments (887,500) (983,121) TOTAL EXPENSES 17,637,000 17,637,000 18,493,522 18,493,522 ANNUAL SURPLUS: before exclusions (2,478,800) (5,550,320) EXCLUSIONS: Amortization of TCA 2,339,700 2,413,600 Post Employment Benefits Solid Waste Landfill Closure and Post-Closures TOTAL EXCLUSIONS 4,679,400 2,339,700 2,413,600 ANNUAL SURPLUS: after exclusions (139,100) 7,963,920 (3,136,720) 132 Report Title Tax Rates Explained Report No. FIN 17-03 Author Dave Rushton Meeting Type BUDGET MEETING Council Date JANUARY 10, 2017 Attachments RECOMMENDATION THAT Council receives report FIN 17-03 Tax Rates as information. EXECUTIVE SUMMARY To explain the difference between Tax rates and the General Levy imposed by the Town. BACKGROUND There are two factors which affect the amount of taxes paid by residents of the Town. The first is the General Levy tax rate, and the second is the change in assessment value of a property. The General tax rate is determined through the budget process. An increase in budget dollars will result in an increase of the general levy tax rate. The change in Current Value Assessment (CVA or growth) is determined by MPAC based on a variety of factors. MPAC performs reassessments every 4 years, in which 2017 is year one of the next reassessment cycle. Properties with an increase in CVA will see an increase of their property value phased-in over the 4 year period. Properties with a decrease in CVA will see the decreased value in year one. An additional impact is the weighting factor provided to each class such as multi-residential, commercial and industrial which are greater than the residential (RT) zoned properties. Farms are taxed at 25% of their value for property tax purposes. The combination of these factors is what determines a change in tax dollars paid by a municipal taxpayer. 2017 Impact An increase in the budget of $603,200 is proposed. MPAC’s reassessment has resulted in an overall average increase in weighted CVA of 1.1%. A summary of changes in the weighted CVA has been provided below. Residential class has seen growth in new homes and increased property values while non-residential have decreased. Based on last year’s tax levy, this means the residents will see an increase of $150,000, before any budgeting impact is factored in. Page 1 / 2 Tax Rates Explained 133 Since the proposed increase is $603,200 and $150,000 is accounted for through growth, the remaining difference of $453,200 must be funded through a general levy increase. This will result in an overall levy increase of 3.3% over last year’s tax rate. What will Residents Pay? As you can see from the chart above, the value of residential properties has increased by almost 2%, while non-residential classes combined have decreased by 15%. Unfortunately, when the CVA of commercial, industrial, farmland or vacant land decreases, the residential class picks up the differential as this will always be our largest growing tax class. The Median residential CVA increased from $221,750 to $226,000. The average tax levy for the Median household in 2016 would have been $1,604.21. With the proposed tax dollar increase of $603,200, the same household will pay $1,689.36 in 2017, a difference of $85.15 per year, or $7.10 per month As discussed in the Asset Management Plan, an increase in the levy is needed to build towards a plan that will allow us to sustain the assets we have. Based on this year, $25.86 of the median resident’s tax increase of $85.15 would go to capital. 2017 General Levy PRELIMINARY 2017 2016 2017 2017 WEIGHTED/ WEIGHTED/ Phase - In TAX DISCOUNTED DISCOUNTED CVA RATIO CVA CVA RESIDENTIAL 1,292,511,258 1 1,292,511,258 1,256,827,097 MULTI-RESIDENTIAL 51,345,425 2.74 140,686,465 144,847,634 COMMERCIAL 142,270,968 1.9018 270,570,927 276,357,943 COMMERCIAL NEW CONSTRUCTION 9,915,950 1.9018 18,858,154 18,103,234 VACANT UNITS/EXCESS LAND 1,046,739 1.9018 1,393,482 1,760,791 VACANT LAND 1,983,250 1.9018 2,640,221 3,007,849 COM'L NEW CONST. - EXCESS LAND 34,300 1.9018 45,662 49,257 INDUSTRIAL 29,683,125 2.63 78,066,619 81,833,055 INDUSTRIAL NEW CONSTRUCTION 1,744,750 2.63 4,588,693 4,576,200 VACANT UNITS/EXCESS LAND 597,225 2.63 1,020,956 1,422,475 VACANT LAND 719,725 2.63 1,230,370 1,006,212 LARGE INDUSTRIAL 23,542,400 2.63 61,916,512 63,305,749 VACANT UNITS/EXCESS LAND 44,400 2.63 75,902 330,571 PIPELINES 5,011,500 1.2593 6,310,982 6,086,197 FARMLAND 7,941,475 0.25 1,985,369 1,703,325 FARMLAND DEV PH 1 1,306,075 1 587,734 533,385 1,569,698,565 1,882,489,304 1,861,750,973 Page 2 / 2 Tax Rates Explained 134 Report Title Funding the Asset Management Plan Report No. FIN 17-04 Author Dave Rushton Meeting Type BUDGET MEETING Council Date JANUARY 10, 2017 Attachments RECOMMENDATION THAT Council receives report FIN 17-04 funding the Asset Management Plan; AND THAT council directs staff to bring forward a capital budget in the fall using the amount of the increase in property value assessment (growth) towards funding the Asset Management Plan. EXECUTIVE SUMMARY To explain the support in taxation for sustaining the asset management plan. BACKGROUND The Director of Operations and the Deputy Treasurer have reviewed the Asset Management Plan with council and proposed that a capital tax levy be put in place. This would work towards providing us with funding to replace assets as they wear out rather than through debenture. We are proposing to use the growth in property value as the source for increased funding. With this plan, the funding of asset replacement would be funded through the tax on the increasing value of real estate. The overall growth this year, after factoring in the increase in residential real estate values and the decrease in the assessed values of non-residential values, is a 1.1% increase. We would like to see this method as a consistent funding source in our plan to have a sustainable Asset Management Plan. The benefits of this would be to allow an increase annually to the capital budget that is predictable. With this information, we could bring a capital budget before council in the fall for approval prior to the operating budget. This timing would allow us to get better pricing on our projects as we find first to market often sees better pricing in tenders. It also allows us a better schedule to start and plan work during the winter prior to busy construction seasons. With direction from council, we can bring the capital budget forward in the fall of 2017 using the growth rate for funding. Page 1 / 1 Funding AMP 135 Report Title Reserves Report No. FIN 17- 05 Author Dave Rushton Meeting Type BUDGET MEETING Council Date JANUARY 10, 2017 Attachments Unrestricted Reserves and Reserve Policy RECOMMENDATION THAT Council receives report FIN 17-05 Reserves; AND THAT Council directs staff to bring forward an updated reserve policy; AND FURTHER THAT Council accepts the general reserve fund to be reported through the use of proposed reserves. EXECUTIVE SUMMARY To explain the value of separating the monies collected for various projects and activities. BACKGROUND “Reserves” are a provision or amount that is designated for a future purpose that extends beyond the current fiscal year. Reserves are set up or utilized by resolution. Prior to 2009, we maintained separate general ledger accounts for various reserves. In that year, we reduced our tax rate and ended the year with a very large deficit. To assist with this, council directed that unrestricted reserves be used to offset the deficit. Since that time, funds have been put into the general reserve fund rather than specific funds. In 2013, the attached Reserve Policy was established but general ledger accounts were not re-established. We would like to return to the practice of having unrestricted reserves maintained in the same bank account but separate general ledger accounts. This will allow us to use the funds for the purpose for which they were collected and still leave them ultimately to the direction of council to redirect them as necessary. To demonstrate this, we have incorporated this in the 2017 Budget for information purposes. Some operating departments such as fleet, and beginning in 2017 IT, collect monies for future capital purchases within their charges to other departments. We will be asking in the new policy for these funds to be transferred into reserves for future year’s asset replacement. With direction from council, staff will bring forward a revised “Reserve Policy” establishing the new reserves. The policy will provide for direction of operation funds including monies collected for future projects and the use of reserves for surplus earnings or deficit. Page 1 / 2 Reserves 136 UNRESTRICTED RESERVES Reserve Investment Projected Account Balance Transfers Transfers or Other Balance Name 01-Jan-17 In - 2017 Out - 2017 Income 31-Dec-17 Income 20,000 20,000 Airport 57,450 57,400 50 Building - - Council 13,400 13,400 CSC 32,703 32,700 3 Ec. Dev 849,271 531,500 317,771 Eng 38,156 38,100 56 Fire 14,000 45,000 14,000 45,000 Fleet 319,552 310,000 9,552 General 411,575 411,575 IT 302,192 65,000 290,000 77,192 Misc 220,000 220,000 Parking 180,214 36,000 144,214 Parks 21,918 21,918 Police 123,783 41,000 82,783 RCP 140,656 143,900 3,244- Roads 92,754 92,900 146- Roof 5,318 5,318 Museum 5,000 5,000 - Election 44,000 44,000 Trans Stn 21,000 21,000 - Non-cash 398,532 398,532 3,291,474 110,000 1,613,500 20,000 1,807,974 Page 2 / 2 Reserves 137 THE CORPORATION OF THE TOWN OF TILLSON BURG RESERVE POLICY APPOVAL DATE: REVISION DATE: 11/25/201 3 APPENDICES: N/A Page 1 Page 1 of 3 138 BY-LAW No. 3779 OF THE CORPORATION OF THE TOWN OF TILLSONBURG A BY-LAW TO ESTABLISH A RESERVE POLICY NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE TOWN OF TILLSONBURG HEREBY ENACTS AS FOLLOWS: 1.0 DEFINITIONS In this By-Law: a) "Reserves" is a provision or amount that is designated for a future purpose that extends beyond the current fiscal year. Reserves are set up or utilized by resolution. All related interest earnings are reported as general operating earn ings. b) "Reserve Fund" shall mean an amount set asid e by a by-law based on a statutory requirement (obligatory reserve fund) or a specific designated purpose (discretionary reserve fund). The Development Charges reserve fund, for example, is an obligatory reserve fund, req uired by legislation that is maintained year over year to help fund growth related capital projects. Or the Cemetery Maintenance Reserve Fund that is maintained year over year to fund Cemetery repairs and maintenance expenditures. Cash placed in a reserve fund earns interest. 2.0 POLICY STATEMENT 2.1 Objectives: a. To establish reserves as approved by Council for: i. future capital expenditures; ii. operating projects or surpluses; iii. sale of fixed assets or land iv. unexpected or unplanned events; v. th e reduction of debt financing; vi. or any oth er pu rpose that Council designates; Page 2 139 that would otherwise cause fluctuations in the operating or capital budgets. b. To establish reserve funds through the adoption of a by-law for: i. specific purposes as approved by Council. c. All reserves held in cash will be held in a separate bank account. 3.0 ACCOUNTABILITY The Director of Finance or his/her designate shall maintain accountability on behalf of Council relating to the administration of reserves, including the process to transfer to and from reserves once approved by Council. Staff provides recommendations on the transfer of funds to and from reserves. 4.0 PRESCRIBED COUNCIL AUTHORITY a. Establish new reserves; b. Close existing reserves; c. Amalgamate reserves; d. Transfer funds to and from reserves via the approved annual budget; e. Transfer funds to and from reserves through Council resolution not addressed through the budget process. 5.0 REPORTING Projected contributions and uses of reserves are provided as a component on the annual budget process. Reserve and reserve fund balances are provided as a component of the annual Town financial statements. 6.0 OTHER Where any other By-law exists which is in conflict with a provision of this Policy, the provision of this Policy shall be deemed to apply. This Policy shall be reviewed and updated,y date of its enactment. ( ~Donna Wilson DATED Page 3 140 Report Title White Paper – Business Case for 1.0 FTE Mechanic Report No. OPS 17-03 Author Senior Leadership Team Meeting Type Budget Meeting Council Date January 10, 2017 Attachments RECOMMENDATION THAT Council receive Report OPS 17-03 White Paper – Business Case for 1.0 FTE Mechanic as information. SUMMARY Fleet Services is responsible for the stewardship of the Town’s fleet of vehicles and equipment including compliance with applicable legislative requirements for various Town departments. Services and responsibilities include: •Preventative Maintenance •24 hour / 7 days per week On-Call Service •General Repairs and Documentation as per CVOR Reg 424 •Warranty Recovery & Tracking •Recall Notification & Tracking •Fuel Inventory Management •Parts & Supplies Inventory Management •Replacement Specifications and Bid Evaluation •Surplus Vehicle Disposal Administration •Vehicle Licensing, Registration and Insurance •Motor Vehicle Inspection Station requirements as per HTA 601 •Annual Vehicle Inspection and Report as per HTA Reg 611 •Review all Driver Daily Inspection Reports as per HTA Reg 199 •Conduct Immediate Repairs of any critical defects reported as per HTA Reg 512 •Documentation of the Drivers Hours of Service as per HTA Reg 555 •Review Driver and Carrier Abstract as per CVOR Reg 424 •Vehicle Accident Damage Administration The dedicated hard work of current staffing resources within Fleet Services is no longer sufficient to regain and maintain compliance with the requirements of the Commercial Vehicle Operator Registration (CVOR) Reg 424 for the Town. The increased administrative demands as a result of changing legislative requirements to the CVOR and various regulations under the Highway Traffic Act (HTA) has not only increased the work load, but also the backlog of outstanding repairs, resulting in service level issues to user departments (i.e. Roads, THI, Fire, Parks, etc.) that provide services to the community. Page 1 / 2 141 Some of the risks associated with continuing status quo include: • employee burn-out • increased repair backlog • increased/continued service level issues to user departments • continued non-compliance with CVOR and HTA regulations CONSULTATION / COMMUNICATION As part of the 2017 draft budget development Senior Leadership discussed the possibility of outsourcing mechanic services, but determined that contracting out would not alleviate the need to backfill during vacation or illness, nor assist with succession planning. In addition, due to the nature of Town business, internal prioritization, knowledge, and expertise is required to ensure operator and public safety. The Senior Leadership Team also discussed the importance of the additional staff resource within Fleet Services to help mitigate service level issues to user departments, prevent employee burn-out, and the importance of regaining CVOR compliance. FUNDING IMPACT/ FUNDING SOURCE The associated cost of $75,000 for the 1.0 FTE Mechanic has been included in the 2017 proposed draft budget. Page 2 / 2 142 Report Title Budget Issue Paper: Utilities Cost Increases Report No. RCP 17-02 Author Rick Cox, Director of Recreation, Culture & Parks Meeting Type Budget Meeting Council Date January 10, 2017 Attachments •The Mysteries of Electricity Pricing in Ontario •Guide to Electricity Pricing in Ontario RECOMMENDATION THAT Report RCP 17-02 – Budget Issue Paper – Utility Cost Increases be received for information. EXECUTIVE SUMMARY Unit costs for utilities (electricity, gas & water) have risen over the last five years. Increases in the budget allocation for utilities have not kept up with increases in actual costs. The largest contributor to the increased cost is the increase in the unit cost of hydro. BACKGROUND The combined cost to the Town for utilities continues to rise year over year. 2012 was the last year for which the annual budget allocation for utilities was not exceeded by actual utility costs. The largest increase in cost that the Town is experiencing is for electricity. As an example, the amount the Town paid for streetlight hydro in 2012 was just over $186,000. By 2015 that amount was almost $237,000, an increase of 27% over that time period. Factors contributing to the unit rate of electricity: The electricity price portion of the bill is broken down into two price components: •Electricity Price: Also known as the spot price, the market clearing price (MCP) or the Hourly Ontario Energy Price (HEOP) •Global Adjustment: The global adjustment (GA) is the difference between the market price and the electricity price contracted by the government. It is the “top-up” that most suppliers are paid when they generate electricity. This means that as the market price goes up, the global adjustment goes down because suppliers are recovering more of their Year Budget Actual*Difference 2011 905,999$ 915,051$ -1% 2012 935,383$ 881,010$ 6% 2013 843,630$ 895,679$ -6% 2014 866,250$ 872,656$ -1% 2015 949,921$ 966,254$ -2% 2016 980,500$ 1,052,837$ -7% * 2016 value is projected as Jan-Nov 2016 actual plus 105% of Dec 2015 actuals Page 1 / 3 RCP 17-02 Budget Issue Paper - Utility 143 costs from the market. As a consumer, the Town pays both the electricity price and the global adjustment. Publications prepared by the Environmental Commissioner of Ontario and Bruce Power are attached with this issue paper as additional explanation. This cost/kWh graph illustrates the unit cost increase that is being experienced for our largest hydro accounts at the Complex and for streetlights. For Jan-Nov this year, the cost for hydro at the Complex is approximately $363,000 at an average unit cost of $0.152. If the 2013 average price of $0.119 was in effect, the same hydro would have cost approximately $287,000. Efforts to reduce the cost: As per the Town’s Energy Conservation and Demand Management plan approved in 2014, there are continual efforts to reduce consumption of utilities through operational process changes and selection of new equipment. An example of a process change that results in substantial annual consumption savings was delaying the start-up of the Memorial ice rink until after the Shriners’ annual Pork BBQ. This collaboration between the Town, the Shriners and the Agricultural Society has permanently reduced the amount of hydro used at the Complex during the period of Aug-Nov by 7-9% depending on the weather. While there has been ‘cost avoidance’ this has translated into little actual cost savings, as the 2016 hydro cost for that period is 21% higher for 7% less hydro than in 2013. Other process changes that have been implemented include: • eliminating winter use of Summer Place (hydro savings) • using passive solar to pre-heat water for the Waterpark (natural gas savings) Since hydro is such a large component of the overall town utility cost it has and continues to be hydro consumption reductions that is the main focus. Further, the largest hydro account is the Complex, so the majority of interventions and changes are being made there in order to realize the largest proportional benefit. The 2017 draft capital budget includes two energy conservation-related projects to continue efforts to reduce consumption. One will replace the high-pressure sodium lights above both rinks with new LED technology. The second is the start of implementing the energy retrofit project for the ice plant and pool HVAC that has been developed out of the I. B. Storey Inc. study. In 2017, the design will be completed and tendered to secure firm costs for construction in the summer of 2018. Page 2 / 3 RCP 17-02 Budget Issue Paper - Utility 144 CONSULTATION/COMMUNICATION N/A FINANCIAL IMPACT/FUNDING SOURCE If the budget allocation for utility costs is inadequate, there is an impact on the Town’s in-year financial position. COMMUNITY STRATEGIC PLAN (CSP) IMPACT This issue paper provides information in alignment with the following Objective of the Community Strategic Plan: • Objective 1 – Excellence in Local Government Page 3 / 3 RCP 17-02 Budget Issue Paper - Utility 145 The Mysteries of Electricity Pricing in Ontari Posted on February 20, 2013 by ECO There is much confusion, misunderstanding and misrepresentation with regard to what the price of e Ontario, and how we set that price. It seems to me that we must establish a clear understanding of matter in order to have an intelligent public discussion on the topic. Accordingly, this blog will attemp basics of electricity pricing. To be clear, I’m just going to focus on the mechanism that sets the price electricity on your bill. I am ignoring the delivery charge, the regulatory charges and debt retirement they tack on afterwards. Hourly Ontario Energy Price (HOEP) One key element in setting the price of electricity is called the Hourly Ontario Energy Price, or HOEP “hope”). This price is set on a market, which works like this: The Independent Electricity System Operator (IESO) predicts the demand of electricity for the next h with this information, generators (for instance natural gas plants, nuclear power plants, or wind farm bid to supply electricity to meet this demand. Also in theory, the cheapest suppliers would get contra demand rises, the price would also rise, and more expensive generators would enter the market. But this is not a free and open market that Adam Smith would recognise. The invisible hands in this rummaging in our pockets. Almost all the generators playing in this market have prices that are fixed or subsidized – so they will never lose money, no matter how low the market goes. So lets look at a graph of the monthly weighted average HOEP from 2005 to 2012 to see how this w Page 1 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 146 You can see that the highest HOEP was actually in 2005, where it touched 10¢/kWh. After that, the off to between 4¢ and 6¢/kWh for a few years. When the economy collapsed in 2009, demand fell a dropped, and has fluctuated in the 2¢ to 4¢/kWh range for the last 4 years. The key point here is that (outside of some of our older large hydro-electric facilities), no generator c sell power at 4¢/kWh. So how is this possible? Global Adjustment This magic is done using a marvellous invention called the Global Adjustment (GA). This is an addit charge collected from consumers to pay for those fixed prices, guarantees and subsidies if the HOE So let’s plot the Global Adjustment on the same graph as above. Page 2 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 147 We see that the Global Adjustment displays an almost opposite pattern to the HOEP. With one inter exception (when it went negative), the GA for 2005 to 2009 varied between zero and 1¢/kWh. But th HOEP price crashed, the GA jumped up to the 4¢/kWh range – and subsequently has crept even hi going on here? Remember that the Global Adjustment is the price guarantor for the generators. It actually went neg 2005, when high HOEP meant that Ontario Power Generation’s nuclear and large hydro plants were more from the market price than their guarantee, and they had to kick back money. But for most of t 2009 period, the market HOEP was high enough to satisfy the pricing needs of the generators. It is note on the graph that during that period when the HOEP hits 6¢ the Global Adjustment goes to zer But that was a different economy. In 2009, Ontario saw a drop in demand, largely due to the recess increase in supply (from new gas plants coming into service). The change in the supply-demand ba that almost no generator could make their money on the HOEP, so the price guarantees kicked in, a Adjustment became as large and then a larger hourly charge than the HOEP. So what is the real price of electricity? So to get the real price of electricity, you have to add the HOEP and the Global Adjustment together that looks like on the same graph. Page 3 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 148 The red line is the real market electricity price for the period 2005-2012. You can see that the price s almost 8¢/kWh in heady days of 2005, but then fell back to the 5¢ to 6¢/kWh range through 2006-20 been gradually creeping upwards until the 2005 peak was exceeded, and it broke through 8¢/kWh in Confusion reigns This concept – that the HOEP is not the real market price, because you have to add in the Global A the basis of a lot of confusion in the media and in various public discussions. And this is understand of the way the information is presented. Take for example this screen shot of the IESO website: Page 4 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 149 Follow Follow Environmental Commissioner of Ontario Get every new post on this blog delivered to your Inbox. The site is very informative on a number of levels and you can clearly see the current level of the glo adjustment. But the HOEP is presented as the “Hourly Price” and there is no attempt to add the HO Global Adjustment together. So in this example, the public would conclude that the market price of e 2.5¢/kWh and not the correct 6.27¢/kWh. I hope you now have a better understanding of the basis of wholesale electricity pricing – but we are on your bill yet. To explain your bill we have to get into the intricacies of Time-of-Use pricing and the Energy Board. And those will have to be the topic of another blog posting. RELATED POSTS ◾Consciously Uncoupling: A Short-Term Solution to a Long-Term Problem ◾Reduce, Reuse, Recycle – can this mantra fit into our energy planning model? ◾The Time-of-Use Conundrum ◾Promoting Electricity Pricing Literacy (Part 3 of 3) ◾Promoting Electricity Pricing Literacy (Part 2 of 3) This entry was posted in ECO Commentary, Energy Conservation and tagged electricity, energy ECO. Bookmark the permalink [/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/th of-electricity-pricing-in-ontario/] . Page 5 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 150 Join other followers: Enter email address Sign me up! Page 6 of 6The Mysteries of Electricity Pricing in OntarioEnvironmental Commissioner of Ontario 12/21/2016https://web.archive.org/web/20151022090256/http://www.eco.on.ca/blog/2013/02/20/the-... 151 Your guide to electricity pricing in Ontario A guide designed to help you understand and decipher the components of your electricity bill for your Ontario-based commercial or manufacturing business. - Samira Viswanathan, Market Regulatory Affairs Advisor, Bruce Power Direct 152 2Your guide to electricity pricing in Ontario Table of Contents Part 1: The Electricity Basics 3 kW versus kWh 3 Components of Your Electricity Bill 4 Major Energy Players in Ontario 4 Part 2: Factors that affect electricity price in Ontario 5 What makes up the electricity price? 5 Electricity Supply 7 Electricity Price 8 Weighted Average Example 8 Part 3: The Impact of the Global Adjustment on Electricity Price 10 What is The Global Adjustment and How Does it Impact Electricity Price? 10 The Role of the Independent Electricity System Operator (IESO) 11 Part 4: Types of Electricity Charges on Your Bill 13 1. Delivery Charges 13 2. Regulatory Charges 14 3. Debt Retirement Charge 14 4. Ontario Clean Energy Benefit (OCEB) 14 Part 5: Quick tips to reduce consumption and costs 15 For More Information 16 153 3Your guide to electricity pricing in Ontario Part 1: The Electricity Basics ELECTRICITY BILLS ARE COMPLEX It can be frustrating to consistently pay for something you don’t understand or don’t have the transparency to verify. It’s even more painful when your electricity bills continue to go up without a clear explanation of the cause. What is driving the electricity cost increase? How can you reduce costs in this situation? The first step to solving a problem is understanding it. This guide will help you understand the main parts of your bill, how the electricity price is derived, and what parts of the bill you can realistically influence and control. Eventually, you will be able to use this knowledge to help with things like reducing your demand charges, conserving electricity, making more informed investment decisions and ultimately, helping you define key performance indicators (KPIs) for your business. THE DIFFERENCE BETWEEN ENERGY (kWh) AND DEMAND (kW) 1 kilowatt (kW) – this is a measurement of energy 1 kW is like saying your car can go 1 km/hr – think of it like speed. In the electricity world this is known as power, capacity or demand. 5 kWh is like saying your car went 5 km over a period of time – think of it like distance. In the electricity world this is called energy or consumption. So, if you are a business with a 1,000 kW demand, you may consume, over the course of a month 1,000 kW × 30 days per month × 24 hours per day = 730,000 kWh in a month. However, you may not always be going at a speed of 1,000 kW so to accurately measure how far you have gone, your local distribution company (LDC), also called a utility, will come and read your meter. Your electricity meter is like the odometer of your car. Your electricity price is made up of both demand (speed) and consumption (distance) charges. 154 4Your guide to electricity pricing in Ontario COMPONENTS OF YOUR ELECTRICITY BILL Utilities vary how they display your information but generally, your bill is grouped into the categories outlined in the charts below. BILL COMPONENT TYPE OF CHARGE Electricity (includes the global adjustment) Consumption Delivery Demand Regulatory Charges Consumption Debt Retirement Charge Consumption HST Consumption and Demand (based on entire bill) MAJOR ENERGY PLAYERS IN ONTARIO Prior to deregulation, the electricity sector was essentially Ontario Hydro. However, since deregulation in May 2002, the sector is now composed of: 1. Government of Ontario: controls overall direction and policy. 2. Ontario Energy Board: regulatory body. 3. Ontario Power Authority: electricity planner. 4. Independent Electricity System Operator (IESO): grid operator. 5. Hydro One: Transmitter and distributor. It is the only one of the 77 utilities that is entirely owned by the province. 6. Ontario Power Generation (OPG): electricity generator. It is one of many generators in Ontario, but is the only one to be entirely owned by the province. 7. Bruce Power: electricity generator. It is the largest nuclear plant in the world responsible for 30% of the Province’s energy supply. 43% 13% 24% 9% 5% 6% GA HOEP DELIVERY REGULATORY DEBT RETIREMENT CHARGE HST 155 5Your guide to electricity pricing in Ontario Part 2: Factors that affect electricity price in Ontario WHAT MAKES UP THE ELECTRICITY PRICE? This is the consumption portion of your bill where you are billed by a rate at c/kWh based on your meter reading, usually monthly. The electricity price portion of your bill is further broken down into two price components: 1. Electricity Price: Also known as the spot price, the market clearing price (MCP), or the Hourly Ontario Energy Price (HOEP) 2. Global Adjustment: This used to be the called the Provincial Benefit Both of these prices are constantly changing but you are charged the weighted-average price over the course of the month. The electricity price is determined by the intersection of electricity demand and electricity supply. Both demand and supply are constantly and simultaneously varying. ELECTRICITYPRICE BROKEN DOWN 43% 13% 24% 9% 5% 6% 43% 24% GA HOEP DELIVERY REGULATORY DEBT RETIREMENT CHARGE HST 156 6Your guide to electricity pricing in Ontario ELECTRICITY DEMAND Demand varies based on things like weather and economic activity. Things like air conditioning and heating increase electricity demand. In exceptional circumstances even a hockey game can influence demand. The graph below shows electricity demand on a typical Sunday (shown in grey) and compares it to the Sunday when Canada beat the U.S. in the ice hockey 2010 Olympic finals (shown in orange). Demand during the game was overall lower than a typical Sunday, as many people were gathered together in one room to watch the game. Spikes are noted during intermissions where people left where they were gathered to cook food, turn on lights, or use the bathroom – all things which increase demand. ONTARIO ELECTRICITYDEMANDFEBRUARY 28, 2010 FACE OFF FIRST INTERMISSIONBEGINS SECONDINTERMISSIONBEGINS THIRDINTERMISSIONBEGINS CROSBYSCORES! OVERTIMEBEGINS TYPICALSUNDAY SOURCE: IESO 157 7Your guide to electricity pricing in Ontario ELECTRICITY SUPPLY Electricity supply comes from different fuel types, like wind, solar, hydro (waterpower), natural gas, and nuclear. These fuels types have different supply characteristics, all of which are needed to meet Ontario demand: • Base-load supply includes sources like nuclear and hydro. They are low-cost, reliable and supply electricity 24-7. • Intermittent supply includes sources like wind and solar. They provide electricity when the wind is blowing and the sun is shining. • Peaking supply sources like gas and peaking hydro are used when demand is at its highest – they are flexible but costly. Different fuel types also have different trade-offs when looking at costs, environmental aspects and reliability. There is a need for different types of supply but it is important to recognize that among these sources, there are drawbacks and benefits. The Ontario government looks at these trade-offs (shown below) to help them develop energy policy in the province. ONTARIOELECTRICITYSUPPLY MORE FAVOURABLE LESS FAVOURABLE *Denotes new generation plants Source: Electric Power Research Institute and Ontario Ministry of Energy ENERGY TYPE* ELECTRICITY COSTS CAPITAL COSTS FLEXIBILITY CARBON EMISSIONS AVAILABILITY Gas Solar Wind Water Nuclear 158 8Your guide to electricity pricing in Ontario ELECTRICITY PRICE The price for electricity in Ontario is set every 5 minutes based on the intersection of supply and demand and fluctuates like stock prices. This is called the market clearing price (MCP). It is set in the following way: • Electricity supply is offered into the market at its operating cost. Offers of supply are stacked up from least costly to most expensive to meet demand. Where they intersect is the market clearing price (MCP). • In each hour there are 12 MCP’s, and the hourly average of the MCP is called the Hourly Ontario Energy Price (HOEP). This is what you get charged by your local utility. On your electricity bill you see a volume-weighted average* HOEP, when in reality the price fluctuates on a 5 minute basis. Many large industrial users attempt to estimate upcoming hourly prices and adjust their consumption in light of changing hourly prices, to avoid the highest priced hours and reduce their costs. Is there anything you can adjust in your facility to avoid the highest priced hours of the day? * WEIGHTED AVERAGE EXAMPLE TIME ENERGY (kWh) HOEP (¢/kWh) COST ($) 9:00 AM 1400 1.43 19.95 10:00 AM 1500 1.81 27.20 11:00 AM 1600 2.38 38.05 12:00 PM 1600 3.24 51.90 1:00 PM 1500 3.35 50.27 TOTAL 7600 N/A 187.36 Weighted Average HOEP ($187.36/7600 kWh) = 2.47 ¢/kWh HOURLYONTARIOENERGYPRICE DEMAND (MW)$/MWh12 am 3 am 6 am 9 am 12 noon 3 pm 6 pm 9 pm 12 am BASELOADNUCLEAR & HYDRO INTERMITTENTWIND & SOLAR PEAKINGNATURAL GAS & PEAKING HYDROMARKETCLEARINGPRICE 159 9Your guide to electricity pricing in Ontario The average HOEP for 2013 was 2.5 cents/kWh, and although you don’t see it reflected in your bill, this 2.5 cents average is based on a lot of volatility over the year: If you avoided the top 100 most expensive hours in 2013 you could lower your average price by 6%. Price volatility was recently evident in the January 2014 polar vortex which caused major price spikes. As previously mentioned, the electricity price is derived from the intersection of supply and demand. Supply of electricity comes from different sources which have their own characteristics and trade-offs between costs, environmental friendliness, and reliability. Demand changes based on weather and economic activity. As both supply and demand are highly volatile the price fluctuates wildly on a 5 minute basis; however, the electricity price you see on your bill is the hourly weighted average over the month. MONTHLYCHARGE IN GLOBAL ADJUSTMENT(¢/kWh) MONTHLYCHARGE IN GLOBAL ADJUSTMENT(¢/kWh) -20 -10 0 10 20 30 40 50 HOEP cents/kWh01-Jan-1301-Feb-1301-Mar-1301-Apr-1301-May-1301-Jun-1301-Oct-1301-Jul-1301-Nov-1301-Aug-1301-Dec-1301-Sep-1360 70 HOEP cents/kWh27-Jan-1421-Jan-1415-Jan-1409-Jan-1425-Jan-1419-Jan-1413-Jan-1407-Jan-1403-Jan-1423-Jan-1417-Jan-1411-Jan-1405-Jan-1401-Jan-1440 35 30 25 20 15 10 5 0 -5 160 10Your guide to electricity pricing in Ontario Part 3: The Impact of the Global Adjustment on Electricity Price Since suppliers offer their supply at their operating cost, the market clearing price can often not be high enough for them to cover all of their costs. For example, the average HOEP in 2013 was 2.5 cents/kWh, which was not enough for suppliers to cover the costs of operating their plants. To ensure Ontario has enough electricity supply, the government has signed long-term contracts with most suppliers to make sure they will invest in Ontario, build power plants, and be paid enough to cover their costs (plus a reasonable rate of return). These costs are recovered through the global adjustment. WHAT IS THE GLOBAL ADJUSTMENT AND HOW DOES IT IMPACT ELECTRICITY PRICE? The global adjustment is the difference between the market price and electricity price contracted by the government. It is the “top-up” that most suppliers are paid when they generate electricity. This means that as the market price goes up, the global adjustment goes down as suppliers are recovering more of their costs from the market and less from the global adjustment. As a consumer, you pay both. For example, if the Hourly Energy Ontario Price is 2 cents/kWh, and an electricity generator has a contract with the government for 8 cents/kWh, the global adjustment is 6 cents/kWh. You, as a consumer of this electricity are charged a total of 8 cents/kWh. GLOBAL ADJUSTMENT ¢/kWhAverage Electricity Costs HOEP + Global Adjustment 8 9 7 6 5 4 3 2 1 0 HOEP GA 161 11Your guide to electricity pricing in Ontario Suppliers have individual contracts, so the amount of the global adjustment will change depending on which suppliers are meeting demand. One contract may be for 13 cents/kWh while another is for 5 cents/kWh. The actual payment to a supplier will be the amount of their contract multiplied by how much they generated: 13 cents/kWh * 300,000,000 kWh/month = $M 39/month 5 cents/kWh * 1,000,000,000 kWh/month = $M 50/month Typically, the more expensive resources produce less kWh as they are used at “peak” times, when Ontario consumption is at its highest. THE ROLE OF THE INDEPENDENT ELECTRICITY SYSTEM OPERATOR (IESO) Ontario’s grid operator, the Independent Electricity System Operator (the IESO) calculates the monthly global adjustment which is then used to determine electricity price and billing. They make two estimates and then provide a final actual amount: • The 1st estimate is provided on the last business day of the month for the next month (e.g., 1st estimate for October is published on Sept 30) • The 2nd estimate is provided on the last business day of the month for the current month (e.g. 2nd estimate for October is published on Oct 31) • The final rate is published at the middle of the following month (e.g., the final October rate is posted around November 15). These preliminary estimates need to be made in advance of the final so that the LDCs can bill their customers on time by using the 1st or 2nd estimate and then truing up their customer in the following bill cycle. The majority of customers in Ontario are billed using the first estimate of the global adjustment. If we look at the September 2013 1st estimate, the IESO had to: • Estimate the amount of supply and the “top-up” money that will be paid to suppliers (millions of dollars each month) = $M 666.7, and divide it by; • Estimate of monthly of all Ontario consumption = 7,647,396 MWh, to arrive at $63.08/MWh (or 6.308 cents/kWh) *Note: 1 MWh = 1000 kWh. This is no simple task and is why there is often a deviation between both estimates and the actual rate. You can find the IESO’s global adjustment information here. http://www.ieso.ca 162 12Your guide to electricity pricing in Ontario There is also variation in the global adjustment month over month, as illustrated in the graph below. It is difficult to predict the variation in global adjustment but it is clear that the global adjustment is on the rise. It will continue to rise as suppliers with government contracts build projects that require this “top-up” to the market price. The graph below shows the increase in yearly global adjustment since 2009: MONTHLYCHARGE IN GLOBAL ADJUSTMENT(¢/kWh) YEARLYAVERAGE GLOBALADJUSTMENT(¢/kWh)Monthly Change in Global Adjustment (¢/kWh)JanJanMayMayOctOctFebFebJunJunNovNovMarMarAugAugJulJulDecDecAprAprSepSep3 2 1 0 -1 2012 2013 -2 -3 Yearly Average Global Adjustment (¢/kWh)2009 2010 2011 2012 2013 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 3.1 2.9 4.1 5.1 4.9 163 13Your guide to electricity pricing in Ontario You pay the global adjustment based on how much you consume. This amount varies all the time as it is based on the “top-up” paid to suppliers of electricity and total amount of consumption in the province for a given month. Both the global adjustment and HOEP are energy consumption based charges. If you had a monthly January 2014 meter reading of 730,000 kWh you would get billed: 1. Electricity Price = 730,000 kWh * 5.7 cents/kWh (weighted average HOEP) = $41,61 2. Global Adjustment = 1,000,000 * 3.626 cents/kWh (GA 1st estimate) = $26,280 3. Total Electricity Charge = $67,890/month Part 4: Types of Electricity Charges on Your Bill 1. DELIVERY CHARGES This is the portion of your bill that utilities charge to deliver electricity from a generator (e.g., Bruce Power’s nuclear power plant) to the transmitter’s system (e.g., Hydro One), to the distributor’s system (e.g., Toronto Hydro), then to your business, as depicted in the illustration. There are 77 utilities that deliver electricity directly to homes and businesses in Ontario. http://www.ieso.ca/imoweb/siteShared/local_dist.asp The delivery charges on your bill cover the costs for a utility to build, operate and maintain infrastructure, such as transmission lines, distribution lines, towers, poles and transformers. It also includes costs that the utility needs to recover for billing, administration, day-to day and emergency services, or any other service it provides. The delivery charge is comprised of a fixed monthly charge and a variable charge. For business and industry, both charges are based on your demand (kW). The rate charged by utility companies is regulated by the Ontario Energy Board (OEB), an independent government agency that serves the public interest. These rates are determined on a five year cycle. The OEB reviews each rate application through a public process, and then sets the rates for the distributor to charge. The rate application is based on a distributor’s costs 164 14Your guide to electricity pricing in Ontario 2. REGULATORY CHARGES Regulatory charges are the costs of administering the electricity system and market, maintaining the reliability of the provincial grid, and covers administration fees of the IESO and the OPA. Utilities collect this charge and pass it through to the IESO who operates the Ontario grid and the OPA who manages long term planning. 3. DEBT RETIREMENT CHARGE The Debt Retirement Charge of 0.68¢ /kWh pays down the residual stranded debt of the former Ontario Hydro. Utilities collect this money and pass it through to the Ontario government. Although the debt was acquired in the past, it is paid by today’s electricity customers since the electricity generation and transmission infrastructure financed by the debt continue to be used by all Ontario’s electricity consumers. By law, the Debt Retirement Charge will end when the government’s assets and the estimated value of its other dedicated revenues from the electricity sector are sufficient to service and retire the remaining amount of debt and other liabilities. The government estimates that the Debt Retirement Charge will likely end between 2015 and 2018. Click here for more information. http://www.fin.gov.on.ca/en/tax/drc/index.html 4. ONTARIO CLEAN ENERGY BENEFIT (OCEB) The Ontario Clean Energy Benefit takes 10% off the cost of up to 3,000 kWh/month of electricity use. A medical exemption from the 3,000 kWh/month cap is available. Medical Exemption. http://www.energy.gov.on.ca/en/clean-energy-benefit/#qme#qme Click here for more information. http://www.energy.gov.on.ca/en/clean-energy-benefit The OCEB expires on December 31, 2015. 165 15Your guide to electricity pricing in Ontario Based on the information in this guide, there are 6 things you can do to start reducing consumption and saving money for your Ontario-based business today. 1. The electricity component of your bill is charged on a weighted consumption (kWh) basis, so the less you consume the lower the portion of your bill will be. However we now know that it also matters when you consume, so the best thing to do is avoid consuming in times when the price of electricity is high. This typically happens in the “peak” hours of the day from 7am to 7pm. You can also sign contracts with an electricity retailer like Bruce Power Direct for a set price of electricity over a longer period of time (e.g., 1 year). 2. Similarly, consume less during peak hours of the day. The global adjustment is charged on a weighted consumption (kWh) basis, so the less you consume during peak hours of the day, the lower this portion of your bill will be. 3. The delivery component of your bill is charged on a demand basis. Some utilities like Toronto Hydro charge you based on your maximum demand and your demand during peak hours (7am – 7pm on weekdays). Other utilities use your average demand. De- pending on your utility, lowering your maximum, peak, or average demand will lower your delivery costs. 4. The regulatory component makes up about 5% of your bill. The majority of this charge is billed on a consumption basis; therefore, the less you consume, the less you pay. 5. The Debt Retirement Charge is also a consumption based charge – the less you consume, the less you pay. Part 5: Quick tips to reduce consumption and costs 166 For More Information For more information on anything included in this guide, or advice on how to reduce costs and consumption even further, please contact Bruce Power Direct: CHRIS LOUGHREN Manager, Commercial Energy Solutions Bruce Power Direct Email: chris.loughren@brucepower.com Phone: 416-786-7336 Toll Free: 1-855-247-1122 BECOME AN EMPOWERED ELECTRICITY CONSUMER. Let us help you understand electricity pricing in Ontario and start saving today. 167 THE CORPORATION OF THE TOWN OF TILLSONBURG BY-LAW NUMBER 4073 BEING A BY-LAW to confirm the proceedings of Council at its meeting held on the 10th day of January, 2017. WHEREAS Section 5 (1) of the Municipal Act, 2001, as amended, provides that the powers of a municipal corporation shall be exercised by its council; AND WHEREAS Section 5 (3) of the Municipal Act, 2001, as amended, provides that municipal powers shall be exercised by by-law; AND WHEREAS it is deemed expedient that the proceedings of the Council of the Town of Tillsonburg at this meeting be confirmed and adopted by by-law; NOW THEREFORE THE MUNICIPAL COUNCIL OF THE CORPORATION OF THE TOWN OF TILLSONBURG ENACTS AS FOLLOWS: 1.All actions of the Council of The Corporation of the Town of Tillsonburg at its meeting held on January 10, 2017, with respect to every report, motion, by-law, or other action passed and taken by the Council, including the exercise of natural person powers, are hereby adopted, ratified and confirmed as if all such proceedings were expressly embodied in this or a separate by-law. 2.The Mayor and the Clerk are authorized and directed to do all the things necessary to give effect to the action of the Council of The Corporation of the Town of Tillsonburg referred to in the preceding section. 3.The Mayor and the Clerk are authorized and directed to execute all documents necessary in that behalf and to affix thereto the seal of The Corporation of the Town of Tillsonburg. 4.This by-law shall come into full force and effect on the day of passing. READ A FIRST AND SECOND TIME THIS 10th DAY of January, 2017. READ A THIRD AND FINAL TIME AND PASSED THIS 10th DAY of January, 2017. ________________________________ MAYOR – Stephen Molnar ________________________________ TOWN CLERK – Donna Wilson 168