170627 Special Meeting AGDTable of Contents
Agenda 2
Tillsonburg Hydro Inc. Annual General Meeting
Tillsonburg Hydro Inc. Agenda Packet 2017-06-27 12-
00 4
By-Law 4118, To Confirm the Proceedings of the Council
Meeting of June 27, 2017.
By-law 4118 Confirming June 27 32
1
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1. Call to Order
2. Adoption of Agenda
Proposed Resolution #1
Moved By: Seconded By:
THAT the Agenda as prepared for the Council meeting of Tuesday, June 27, 2017 , be
adopted.
3. Moment of Silence
4. Disclosures of Pecuniary Interest and the General Nature Thereof
5. Public Meetings
5.1. Tillsonburg Hydro Inc. Annual General Meeting
Tillsonburg Hydro Inc. Agenda Packet 2017-06-27 12-00
Proposed Resolution # 2
Moved By: Seconded By:
THAT Council move into the Annual General Meeting of the Shareholder of Tillsonburg
Hydro Inc.
6. Notice of Motions
7. By-Laws
By-Laws from the Meeting of Tuesday, June 27, 2017
Proposed Resolution #3
Moved By: Seconded By:
The Corporation of the Town of Tillsonburg
COUNCIL MEETING
Tuesday, June 27, 2017
10:00 AM
Council Chambers
200 Broadway, 2nd Floor
AGENDA
2
Council Meeting – Agenda - 2 -
7.1. THAT By-law 4118 Confirming June 27 To Confirm the Proceedings of the Council Meeting
of June 27, 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.
8. Adjournment
Proposed Resolution # 4
Moved By: Seconded By:
THAT the Council Meeting of Tuesday, June 27, 2017 be adjourned at _____ p.m.
3
Table of Contents
Agenda 2
Minutes of the Annual General Meeting of June 21, 2016
160621 THI AGM Min 5
2016 Audited Financial Statements
2016 Tillsonburg Hydro Inc. Financial Statements 10
THI Independence Letter 27
14
1. Call to Order
2. Adoption of Agenda
Resolution No. 1:
THAT the agenda for the Annual General Meeting of Directors of Tillsonburg
Hydro In. on Tuesday, June 27, 2017 , be adopted.
3. Disclosures of Pecuniary Interest and the General Nature Thereof
4. Adoption of Minutes of Previous Meeting
160621 THI AGM Min
Resolution No. 2:
THAT the Minutes of the Tillsonburg Hydro Inc. Annual General Meeting of June
21, 2016, be approved.
5. Appointments
5.1. Appointment of Directors for Tillsonburg Hydro Inc.
Resolution No. 3:
THAT the appointment of Directors for Tillsonburg Hydro Inc. for the current term
until the next Annual General Meeting shall be as follows:
John Gilvesy, Daniel Rasokas, Alex Urbanowicz, Ann Loker, Ernie Vidovic, Julie
Ann Snell and ______________________(Shareholder Representative).
Tillsonburg Hydro Inc.
ANNUAL GENERALMEETING
Tuesday, June 27, 2017
10:00 AM
Council Chambers
200 Broadway, 2nd Floor, Tillsonburg
AGENDA
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THI Board Meeting – Agenda - 2 -
6. Finance
6.1. Finance
6.1.1. 2016 Audited Financial Statements
2016 Tillsonburg Hydro Inc. Financial Statements
THI Independence Letter
Resolution No. 4:
THAT The auditor’s report for 2016 as presented by Christine Scrimgeour, CPA,
CA, Scrimgeour & Company, and all activities and transactions for the year
ended December 31, 2016 be approved.
6.1.2. Appointment of Auditor for the 2017 Fiscal Year
Resolution No. 5:
THAT the Shareholder appoint Christene Scrimgeour, CPA, CA, Scrimgeour &
Company, as auditor for Tillsonburg Hydro Inc. for the 2017 fiscal year.
7. Legal
7.1. Appointment of Legal Council for the 2017 Fiscal Year
Resolution No. 6:
THAT the Shareholder appoint Aird & Berlis, LLP as general legal counsel for
Tillsonburg Hydro Inc. for the 2017 fiscal year.
7.2 Ratification of Tillsonburg Hydro Inc. Board Decisions for the 2016 Fiscal
Year
Resolution No. 7:
THAT the actions and proceedings of the Board of Directors of Tillsonburg
Hydro Inc. for the 2016 fiscal year be hereby ratified and confirmed.
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THI Board Meeting – Agenda - 3 -
8. Adjournment
Resolution No. 8:
THAT the Annual General Meeting of Tillsonburg Hydro Inc. be adjourned at
________p.m.
47
Attendance:
Mayor Stephen Molnar
Deputy Mayor Beres
Councillor Adam
Councillor Esseltine Councillor Rosehart
Regret:
Councillor Jim Hayes
Councillor Stephenson
Board Members:
Chair John Gilvesy
Alex Urbanowicz Ann Loker Daniel Rasokas
Cliff Evanitski
1. Call to Order
The meeting was called to order at 11:10 a.m.
2. Adoption of Agenda
Resolution No. 1:
Moved By: Councillor Rosehart
Seconded By: Councillor Esseltine
THAT the agenda for the Annual General Meeting of Directors of Tillsonburg Hydro
In. on Tuesday, June 21, 2016, be adopted.
Carried
Tillsonburg Hydro Inc.
ANNUAL GENERAL MEETING
Tuesday, June 21, 2016
11:00 AM
Council Chambers
200 Broadway, Tillsonburg
MINUTES
58
THI Board Meeting – Agenda - 2 -
3. Disclosures of Pecuniary Interest and the General Nature Thereof
There were no disclosures of pecuniary interest declared.
4. Adoption of Minutes of Previous Meeting Tillsonburg Hydro Inc. AGM Minutes 2015-06-16
Resolution No. 2:
Moved By: Councillor Rosehart
Seconded By: Councillor Esseltine
THAT the Minutes of the Tillsonburg Hydro Inc. Annual General Meeting of June
16, 2015, be approved.
Carried
5. Appointments
5.1. Appointment of Director for Tillsonburg Hydro Inc.
Resolution No. 3:
Moved By: Councillor Esseltine
Seconded By: Councillor Rosehart
THAT John Gilvesy, Daniel Rasokas, Alex Urbanowicz, Cliff Evanitski , Ann
Loker and Dave Beres shall be appointed as Directors for Tillsonburg Hydro Inc.
until a special meeting of the Shareholder is called in October 2016.
Carried
6.0 Finance
6.1 2015 Audited Financial Statements
2015 Tillsonburg Hydro Inc Financial Statements Unsigned
Auditor Indepen ltr
Christene Scrimgeour, Auditor for THI, presented the 2015 Annual Financial
Statements.
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THI Board Meeting – Agenda - 3 -
The Board was given the opportunity to ask questions.
Resolution No. 4:
Moved By: Councillor Esseltine
Seconded By: Councillor Rosehart
THAT The auditor’s report for 2015 as presented by Christine Scrimgeour, CPA,
CA, Scrimgeour & Company, and all activities and transactions for the year
ended December 31, 2015 be approved.
Carried
6.2 Appointment of Auditor for the 2016 Fiscal Year
Resolution No. 5:
Moved By: Councillor Adam
Seconded By: Councillor Esseltine
THAT the Board appoint Christene Scrimgeour, CPA, CA, Scrimgeour &
Company, as auditor for Tillsonburg Hydro Inc. for the 2016 fiscal year.
Carried
7.0 Legal
7.1 Appointment of Legal Council for the 2016 Fiscal Year
Resolution No. 6:
Moved By: Councillor Adam
Seconded By: Councillor Esseltine
THAT the Board appoint Aird & Berlis, LLP as general legal counsel for
Tillsonburg Hydro Inc. for the 2016 fiscal year.
Carried
710
THI Board Meeting – Agenda - 4 -
7.2 Ratification of Tillsonburg Hydro Inc. Board Decisions for the 2015
Fiscal Year
Resolution No. 7:
Moved By: Deputy Mayor Beres
Seconded By: Councillor Adam
THAT the actions and proceedings of the Board of Directors of Tillsonburg
Hydro Inc. for the 2015 fiscal year be hereby ratified and confirmed.
Carried
8 Other Business
8.1 Shareholder Nominating Committee
The Chair requested that the vacancy be filled as soon as possible by the
Shareholder.
The Shareholder indicated that the plan will be to interview the applicants and to complete the review of the MSA and MOUD. The Board is currently developing a strategic plan as well as a review of the
governance documents.
There will be a survey provided by a Board consultant to develop the strategic
plan. The survey will be provided to Council, staff and the community.
Resolution No. 8
Moved By: Deputy Mayor Beres
Seconded By: Councillor Adam
THAT a Shareholder Nominating Committee be formed;
AND THAT Mayor Molnar, Councillor Esseltine and Councillor Rosehart be
appointed to the Shareholder Nominating Committee.
Carried
Councillor Adam excused himself from the meeting at 11:25 a.m.
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THI Board Meeting – Agenda - 5 -
8.2 Tillsonburg Hydro Inc. Shareholder Governance Committee
Councillor Adam returned to the meeting at 11:29 a.m.
Resolution No. 9:
Moved By: Mayor Molnar
Seconded By: Councillor Rosehart
THAT a Tillsonburg Hydro Inc. Shareholder Governance Committee be formed;
AND THAT Councillor Hayes, Councillor Stephenson, and Mayor Molnar be
appointed to the Tillsonburg Hydro Inc. Shareholder Governance Committee.
Carried
9 Adjournment
Resolution No. 10:
Moved By: Mayor Molnar
Seconded By: Councillor Rosehart
THAT the Annual General Meeting of Tillsonburg Hydro Inc. be adjourned at
11:31 a.m and THAT Council move back into regular session.
Carried
912
TILLSONBURG HYDRO INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
1013
TILLSONBURG HYDRO INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
-1-Independent Auditor's Report
-2-Statement of Financial Position
-3-Statement of Retained Earnings
-4-Statement of Comprehensive Income
-5-Statement of Cash Flows
-6- Notes to the Financial Statements
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TILLSONBURG HYDRO INC.
STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31, 2016
2016 2015
ASSETS
Current
Cash and short-term investments $343,999 $723,952
Accounts receivable (note 3)6,208,798 5,489,726
Inventory 276,107 256,243
Prepaid expenses 28,644 81,622
6,857,548 6,551,543
Property, plant and equipment (note 5)
Cost 21,701,360 20,860,602
Less accumulated amortization (11,275,020)(10,947,022)
10,426,340 9,913,580
Other assets
Regulatory assets (note 6)-212,035
Non-utility capital assets (note 11)74,336 89,109
74,336 301,144
TOTAL ASSETS $17,358,224 $16,766,267
LIABILITIES AND SHAREHOLDER'S EQUITY
Current
Accounts payable and accrued liabilities $2,342,859 $2,742,645
Income tax payable (note 3)3,986 23,556
Customer deposits 39,533 28,260
Current portion of long term debt (note 7)149,528 142,910
Deposits in aid of construction 11,503 10,247
Due to related parties (note 12)829,781 740,651
3,377,190 3,688,269
Long term
Customer deposits 236,440 233,076
Deferred contributions (note 8)2,201,188 2,191,154
Long term debt (note 7)109,219 258,747
2,546,847 2,682,977
Regulatory liabilities (note 6)705,974 -
TOTAL LIABILITIES 6,630,011 6,371,246
Shareholder's equity
Common shares (note 9)6,992,565 6,992,565
Contributed capital 990,387 990,387
Retained earnings (page 3)2,745,261 2,412,069
10,728,213 10,395,021
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $17,358,224 $16,766,267
On behalf of the Board:_________________________________________________________
The accompanying notes are an integral part of these financial statements.
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TILLSONBURG HYDRO INC.
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2016
2016 2015
RETAINED EARNINGS, BEGINNING OF YEAR $2,412,069 $1,867,302
Comprehensive income for the year (page 4)483,192 694,767
Dividends (150,000) (150,000)
RETAINED EARNINGS, END OF YEAR $2,745,261 $2,412,069
The accompanying notes are an integral part of these financial statements.
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TILLSONBURG HYDRO INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
2016 2015
Electricity revenue $26,053,864 $23,698,378
Cost of power 26,053,864 23,698,378
Gross margin on power --
Distribution revenue
Distribution service (note 6)3,430,117 3,390,520
Retail service 11,580 9,172
Other 219,748 252,228
3,661,445 3,651,920
Net non-utility activities (note 11)39,806 32,762
Expenditures
Operating and maintenance (note 6)677,226 789,106
Billing and collecting 604,067 586,908
General administration 1,415,708 1,066,737
Regulatory (note 6)28,003 58,136
Amortization (note 3)327,998 325,196
Interest and finance charges 40,557 45,332
3,093,559 2,871,415
Net operating revenue 607,692 813,267
Provision for payment in lieu of corporate taxes (note 10)124,500 118,500
COMPREHENSIVE INCOME FOR THE YEAR $483,192 $694,767
The accompanying notes are an integral part of these financial statements.
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TILLSONBURG HYDRO INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
2016 2015
OPERATING ACTIVITIES
Comprehensive income for the year (page 4)$483,192 $694,767
Changes not involving cash
Amortization 327,998 325,196
Net change in non-cash working capital
balances related to operations (A)(1,003,655)(432,917)
(192,465)587,046
INVESTING ACTIVITIES
Deferred contributions 10,034 267,787
Capital asset acquisitions (net of dispositions)(840,758)(591,805)
Non-utility capital asset disposals (acquisitions)14,773 14,773
(815,951)(309,245)
FINANCING ACTIVITIES
Regulatory assets (liabilities)918,009 10,290
Customer deposits-long term 3,364 2,597
Debt advances (repayments)(142,910)(136,600)
Dividends paid (150,000)(150,000)
628,463 (273,713)
Change in cash during the year (379,953)4,088
CASH AND SHORT-TERM INVESTMENTS, BEGINNING
OF YEAR 723,952 719,864
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $343,999 $723,952
(A) Consists of changes in accounts receivable, inventory, prepaid expenses, accounts payable and
accrued liabilities, income taxes payable, current customer deposits, deposits in aid of construction and
due to related parties.
The accompanying notes are an integral part of these financial statements.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
1. Reporting entity
Tillsonburg Hydro Inc. (the Corporation) was incorporated under the Business Corporations Act
(Ontario) on October 26, 2000 to distribute electrical power to the residents of the Town of
Tillsonburg in accordance with Section 144 of the Electricity Act, 1998. The Corporation is wholly
owned by the Town of Tillsonburg. The Corporation operates under a licence issued by the Ontario
Energy Board ("OEB"). The Corporation is regulated by the OEB and adjustments to the
Corporation's distribution and power rates require OEB approval. The address of the Corporation's
registered office is 200 Broadway Street, 2nd Floor, Tillsonburg, Ontario, N4G 5A7.
2.Basis of presentation
The Corporation's financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the International Accounting Standards
Board ("IASB") and interpretations as issued by the International Financial Reporting Interpretations
Committee ("IFRIC") of the IASB.
Approval of the financial statements
The financial statements were approved by the Board of Directors on April 25, 2017.
Basis of measurement
The financial statements have been prepared on the historical cost basis.
These financial statements have been prepared using the accrual basis of accounting. The accrual
basis of accounting recognizes revenue as it becomes available and measurable. Expenses are
recognized as they are incurred and measurable as a result of the receipt of goods or services and the
creation of a legal obligation to pay.
Functional and presentation currency
These financial statements are presented in Canadian dollars, which is the Corporation's functional
currency.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
2.Basis of presentation continued
Use of estimates
The preparation of financial statements in conformity with IFRS requires management to make
certain estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Such estimates are periodically reviewed and any
adjustments necessary are reported in earnings in the period in which they become known. Actual
results could differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the year in which the estimates are revised and in any future periods
affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in
applying accounting policies that have the most significant effect on the amounts recognized in
these financial statements is included in the following notes:
i. Note 3 - Revenue recognition - estimate of unbilled revenue
ii.Note 3 - Accounts receivable - allowance for impairment
iii.Note 3 - Property, plant and equipment, useful lives and the identification of significant
components of property, plant and equipment
iv.Note 6 - Recognition and measurement of regulatory balances
Rate setting and industry regulation
The Ontario Energy Board Act (1998) (the Act) gave the Ontario Energy Board (OEB) powers and
responsibilities to approve or set rates for the transmission and distribution of electricity, providing
continued rate protection for electricity consumers, and ensuring that distribution companies fulfil
obligations to connect and service customers. In its capacity to approve or set rates, the OEB has
the authority to specify regulatory accounts treatment that may differ from IFRS for enterprises
operating in a non-rate regulated environment.
The Act provides for a competitive market in the sale of electricity in addition to the regulation of
the monopoly electricity delivery system in Ontario.
The OEB has regulatory authority over the electricity delivery sector. The Act sets out the Board's
powers to issue a distribution license, which must be obtained by any person owning or operating a
distribution system under the Act. The Act allows the Board to prescribe license requirements and
conditions to electricity distributors, which includes such considerations as specified accounting
records, regulatory accounting principles, separation of accounts for separate businesses and filing
requirements for rate setting purposes.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
2.Basis of presentation continued
Rate setting and industry regulation
With the commencement of the open market, the Corporation purchases electricity from the
Independent Electricity System Operator (IESO), at spot market rates and charges its customers
unbundled rates. The unbundled rates include the actual cost of generation and transmission of
electricity and an approved rate for electricity distribution. The cost of generation, transmission and
other charges such as connection and debt retirement are collected by Tillsonburg Hydro Inc. and
remitted to the IESO. The Corporation retains the distribution charge on the customer hydro
invoices. The OEB has the general power to include or exclude costs, revenues, losses or gains in
the rates of a specific period, resulting in a change in the timing of accounting recognition from that
which would have applied in an unregulated Corporation. Such change in timing gives rise to the
recognition of regulatory assets and liabilities. The Corporation's regulatory assets represent certain
amounts receivable from future customers and costs that have been deferred for accounting purposes
because it is probable that they will be recovered on future rates. In addition, the Corporation has
recorded regulatory liabilities, which will represent amounts for expenses incurred in different
periods than would be the case had the Corporation been unregulated. Specific regulatory assets and
liabilities are disclosed in note 6.
The Corporation's approved distribution rates include components for the recovery of distribution
expenses, regulatory assets and liabilities, payments in lieu of corporate income taxes, and a rate of
return on capital assets.
On October 9, 2014, the Corporation submitted a Incentive Regulation Mechanism (IRM) rate
setting application to the OEB for 2015 Electricity Distribution Rates. On March 19, 2015, the
Corporation received a decision from the OEB that approved changes to rates that the Corporation
charges for electricity distribution, to be effective May 1, 2015.
On November 2, 2015, the Corporation submitted a Price Cap Incentive Rate-setting application to
the OEB for 2016 Electricity Distribution Rates. On March 17, 2016, the Corporation received a
decision from the OEB that approved changes to the rates that the Corporation charges for
Electricity distribution, to be effective May 1, 2016.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3. Significant accounting policies
The accounting policies set out below have been applied consistently in all years presented in these
financial statements.
Cash and cash equivalents
Cash and cash equivalents include cash in bank accounts and short-term investments with maturities
of less than one year when purchased.
Revenue recognition
Service revenue is recorded on the basis of regular meter readings and estimates of customer usage
since the last meter reading to the end of the year (unbilled revenue). Estimated customer usage
from the last billing date to the end of the year is included in revenue. The Corporation applies
judgment to the measurement of the estimated consumption and to the valuation of that
consumption. Unbilled revenue, which is included in accounts receivable, at December 31, 2016
was $2,920,683 (2015 - $2,780,435).
Accounts receivable
Accounts receivable are shown net of an allowance for doubtful accounts of $96,629 (2015 -
$57,713).
Inventory
Inventory consists of repair parts, supplies and material held for future capital expansion and
maintenance activities and is valued at the lower of cost and net realizable value, with cost being
determined on an average cost basis. Items considered major spare parts are recorded as capital
assets.
Property, plant and equipment
Property, plant and equipment are measured at cost or deemed cost established on the transition
date. Cost includes expenditures that are directly attributable to the acquisition of the asset. The
cost of self-constructed assets includes the cost of materials and direct labour and any other costs
directly attributable to bringing the asset to a working condition for its intended use.
Parts of an item of property, plant and equipment that have different useful lives are accounted for
as separate items (major components) of property, plant and equipment.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.Significant accounting policies continued
Property, plant and equipment continued
Amortization is recognized in comprehensive income on a straight-line basis over the estimated
useful life of each part or component of property, plant and equipment. Land is not amortized. The
estimated useful lives are as follows:
Distribution station equipment 40 years
Poles, towers and fixtures 50 years
Overhead conductors 60 years
Overhead devices 40 years
Underground conduit 50 years
Underground conductors and devices 30 years
Transformers 40 years
Services - overhead 50 years
Services - underground 40 years
Distribution meters 25 years
Smart meters 15 years
Computer hardware 5 years
Computer software 5 years
Amortization methods, useful lives and residual values are reviewed at each reporting date.
Impairment
Property, plant and equipment assets with finite lives are tested for recoverability whenever events
or changes in circumstances indicate a possible impairment. Any impairment is recognized in
comprehensive income when the asset's carrying value exceeds its estimated recoverable amount.
An impairment charge may be reversed only if there is objective evidence that a change in the
estimate used to determine the asset's recoverable amount since the last impairment was recognized
is warranted. A reversal of an impairment charge is recognized immediately in comprehensive
income. After such a reversal, the amortization charge, where relevant, is adjusted in future periods
on a systematic basis over the asset's remaining useful life.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
3.Significant accounting policies continued
Deferred contributions
Certain assets may be acquired or constructed with financial assistance in the form of contributions
from customers where the estimated revenue is less than the cost of providing service or where
special equipment is needed to supply the customers' specific requirements.
Since the contributions will provide customers with ongoing access to the supply of electricity, these
contributions are classified as deferred contributions and are amortized as revenue on a straight-line
basis over the useful life of the constructed or contributed asset.
Payment in lieu of corporate income taxes
The Corporation provides for payments in lieu of corporate income taxes using the taxes payable
method. Under the taxes payable method, no provisions are made for the future income taxes as a
result of temporary differences between the tax basis of assets and liabilities and their carrying
amounts for accounting purposes. When unrecorded future income taxes become payable, it is
expected that they will be included in the rates approved by the OEB and recovered from the
customers of Tillsonburg Hydro Inc.
Regulatory policies
Tillsonburg Hydro Inc. has adopted the following policies, as prescribed by the Ontario Energy
Board (OEB) for rate-regulated enterprises. The policies have resulted in accounting treatments
differing from International Financial Reporting Standards. IFRS 14, which will undergo a
comprehensive review by IASB in future years, allows the Corporation to continue to follow the
prescribed OEB policies to record the following assets and liabilities:
1. Various regulatory costs have been deferred in accordance with criteria set out in the OEB's
Accounting Procedures handbook. In the absence of such regulation, their costs would have been
expensed when incurred under IFRS.
2. The Corporation has deferred certain retail settlement variance amounts under the provisions of
Article 490 in the OEB's Accounting Procedures handbook.
Future accounting pronouncements
A number of new standards, amendments and interpretations under IFRS are not yet effective for the
year ended December 31, 2016, and have not yet been applied in preparing these financial
statements. The Corporation continues to analyze these standards, however, it is not anticipated
these will have a material impact on its financial statements.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
4. Financial instruments
The fair value of cash, accounts and income taxes receivable, due from (to) related parties, accounts
payable and accrued liabilities and customer deposits is approximately equal to their carrying value
given their short-term maturity date.
Exposure to market risk, credit risk, and liquidly risk arises in the normal course of the
Corporation's business.
Market risk refers primarily to risk of loss that results from changes in commodity prices, foreign
exchange rates and interest rates. The Corporation does not have market risk due to the flow
through nature of its energy purchases and costs. The Corporation does not have foreign exchange
risk. The Corporation minimizes interest rate by issuing long-term fixed rate debt.
Financial assets create credit risk if customers fail to discharge an obligation, causing a financial
loss. The Corporation's distribution revenue is earned on a broad base of customers principally
located in Tillsonburg, with no single customer that accounts for revenue or accounts receivable
balance in excess of 10% of the respective balance.
The Corporation invests in short-term investments which are not considered a credit risk.
Liquidly risk is the risk that the Corporation will not be able to meet its financial obligations as they
become due. Short-term liquidity is expected to be sufficient to fund normal operating
requirements.
5. Property, plant and equipment
The value of property, plant and equipment as at year end are as follows:
Accumulated Net Net
Cost Amortization 2016 2015
Substation land $11,520 $-$11,520 $11,520
Substation equipment 404,210 (348,066)56,144 58,124
Distribution system 20,709,619 (10,351,819)10,357,800 9,842,477
Computer hardware 19,886 (19,858)28 46
Computer software 556,125 (555,277)848 1,413
$21,701,360 $(11,275,020)$10,426,340 $9,913,580
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
6.Regulatory assets and liabilities
The following expenses (recoveries) may be considered by the Ontario Energy Board in future rate
applications and accordingly have been deferred until such time as direction is provided by the
OEB.
2016 2015
Regulatory assets (liabilities):
Retail settlement variances $(841,448)$135,903
Deferred costs 33,849 34,193
Recovery of regulatory assets 101,625 41,939
Total regulatory liabilities $(705,974)$212,035
The retail settlement variance accounts represent the difference between the amount charged by the
IESO based on the settlement invoice and the amount billed to customers using the OEB approved
rates. The disposition of these amounts is expected to be reflected in future rate adjustments.
The balance in the recovery of regulatory assets represents the amount that the OEB has considered
final in prior applications and set a rate for recovery.
The Corporation continually assesses the likelihood of recovery of each of it's regulatory assets and
liabilities into the setting of future rates. If, at some future date, the Corporation judges that it is no
longer probable that the OEB will include a regulatory asset or liability in future rates, the
appropriate carrying amount will be reflected in results of operations in the period that the
assessment is made.
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
7.Long term debt
The Corporation incurred long term financing for the smart meter program. The debt is a bank loan,
repayable over 10 years, bears interest at 4.53%, and has the option of a 10% prepayment each year.
The loan is secured by a general security agreement.
Principal repayments over the next three years are as follows:
2017 $149,528
2018 $109,219
8.Deferred contributions
Deferred customer contributions in aid of construction or acquisition of property, plant and
equipment is as follows:
2016 2015
Deferred contributions received $3,173,337 $3,092,196
Less: Amount recognized as distribution revenue (972,149)(901,042)
Deferred contributions, end of year $2,201,188 $2,191,154
9.Share capital
The share capital of the Corporation consists of the following:
Authorized:
Unlimited common shares
Unlimited number of Class A shares - non-voting, non-cumulative redeemable
2016 2015
Issued
1 voting common share $6,992,565 $6,992,565
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TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2016
10.Payments in lieu of corporate income taxes
As a regulated Lines Distribution Corporation, Tillsonburg Hydro Inc. is required to remit
payments in lieu of corporate income taxes as follows:
2016 2015
Income taxes - current $124,500 $118,500
Payments in lieu of corporate income taxes are calculated on the net operating revenues, adjusted
for timing differences arising on differences between amortization of capital assets for tax
purposes. The applicable rates for the year ending December 31, 2016 are 26.5% (2015 - 26.5%)
combined federal and provincial rates. The timing differences based on the amortization for tax
purposes are not material and therefore, deferred taxes are not recorded.
11.Net non-utility activities
Independent Electricity System Operator/Ontario Power Authority funded Conservation and
Demand Management programs are not regulated by the OEB and therefore, are classified as non-
utility activities. Consequently, these net revenues are not recognized for rate-setting purposes.
The non-utility capital assets are comprised of solar powered equipment which is not regulated by
the OEB. These assets are being amortized over their useful lives and are shown as non-utility
capital assets. The net revenue generated from these assets is recorded in the non-utility activities.
12.Related party transactions
Banking and accounting activities are administered by the Town of Tillsonburg on behalf of
Tillsonburg Hydro Inc. Amounts due from (to) related parties represent the net working capital
position between the Town and the Corporation. A Master Service Agreement, which was
updated in 2013, governs the financial relationship between the Corporation and the Town of
Tillsonburg. These financial statements reflect this Agreement. This Agreement is currently being
reviewed.
13.Prudential support
Tillsonburg Hydro Inc. has posted a letter of credit with the Independent Electricity System
Operator (IESO) in the amount of $956,406 (2015 - $956,406). The IESO is responsible for
ensuring that prudential support is posted by all market participants to satisfy their prudential
support and obligation and, therefore, mitigate the impact of an event of default by a market
participant on the rest of the market.
14.Comparative balances
Certain comparative balances have been reclassified to conform with the current year's financial
statement presentation.
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THE CORPORATION OF THE TOWN OF TILLSONBURG
BY-LAW NUMBER 4118
BEING A BY-LAW to confirm the proceedings of Council at its meetings held on the 27th day of June, 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 June 27th, 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 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 27th DAY OF JUNE, 2017.
READ A THIRD AND FINAL TIME AND PASSED THIS 27TH DAY OF JUNE, 2017.
_____________________________
MAYOR – Stephen Molnar
______________________________
TOWN CLERK – Donna Wilson
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