19082014 Council MINTown of Tillson burg
Minutes of Council
Meeting Date:
Tuesday August 19, 2014
12:15 PM
Council Chambers
Chair: Mayor Dave Beres
MINUTES: Meeting for the Committee "Open Council"
Review Access: e Public 0 Private
Town of Tillson burg
Council Meeting
on
Tuesday, August 19, 2014 12:15 PM
Council Chambers
Chair: Mayor Dave Beres
Orders of the Day:
ATTENDANCE
Mayor Dave Beres
Deputy Mayor Mark Renaud
Councillor Brenda Carroll
Councillor Mel Getty
Councillor Chris Rosehart
Councillor Brian Stephenson
() REGRETS
Councillor Marty Klein
Staff:
David Calder, CAO
Donna Wilson, Town Clerk
ALSO PRESENT:
Phil Esseltine
Mike Bossy
John Gilvesy
CALL TO ORDER
The Meeting was called to order at 12:12 p.m.
ADOPTION OF AGENDA
Moved By: Councillor Rosehart Seconded By: Councillor Getty
THAT the Agenda as prepared for the Council Meeting of August 19, 2014, be adopted.
Carried
) DISCLOSURE OF PECUNIARY INTEREST OR THE GENERAL NATURE THEREOF
081914
Page 1
MINUTES: Meeting for the Committee "Open Council"
Approva I Received: ( 1 of 1)
Donna WilsonfTillsonburg (Wednesday August 20,
2014 03:51 PM)
Town ofTillsonburg
Page 3
CALL TO ORDER
ADOPTION OF AGENDA Pages 1-2
Proposed Resolution No. 1:
THAT the agenda for the Tillsonburg Hydro Inc. Annual General Meeting of August 19,
2014, be adopted.
APPROVAL OF MINUTES Pages 3-5
Minutes of the Tillsonburg Hydro Inc. Annual General Meeting of June 25,2013.
Proposed Resolution No. 2:
THAT the Minutes of the Tillsonburg Hydro Inc. Annual General Meeting of June 25,
2013 be adopted as presented.
APPOINTMENT OF DIRECTORS
1. Appointment of Directors for Tillsonburg Hydro Inc. 2014 Fiscal Year
Presented By: Chair
Page 1 of 25
CALL TO ORDER
The meeting was called to order at 12: 28 PM
ADOPTION OF AGENDA
Resolution No. 1:
Moved By: Councillor Getty Seconded By: John Gilvesy
THAT the agenda for the Tillson burg Hydro Inc. Annual General Meeting of June 25,
2013 be adopted.
"Carried"
APPROVAL OF MINUTES
Minutes of the Tillson burg Hydro Inc. Annual General Meeting of June 26, 2012. Pages 4
-6
Resolution No. 2:
Moved By: Councillor Getty Seconded By: John Gilvesy
THAT the Minutes of the Tillsonburg Hydro Inc. Annual General Meeting of June 26,
2012 be adopted as presented.
"Carried
Page 3 of25
LEGAL
4. Appointment of Legal Council for the 2012 Fiscal Year
Resolution No. 6:
Moved By: Councillor Beres Seconded By: Councillor Klein
THAT the Board appoint Aird & Berlis, LLP as general legal counsel for Tillsonburg
Hydro Inc. for the 2013 fiscal year.
"Carried~~
5. Ratification of Tillson burg Hydro Inc. Board Decisions for the 2012 Fiscal Year
Resolution No. 7:
Moved By: Councillor Beres Seconded By: Councillor Klein
THAT the actions and proceedings of the Board of Directors of Tillsonburg Hydro Inc. for
the 2012 fiscal year be hereby ratified and confirmed.
"Carried"
ADJOURNMENT
Moved By: Councillor Klein THAT the meeting be adjourned at 12:38 PM.
Page 5 of25
\ !
SCRIMGEO COMPANY
INDEPENDENT AUDITOR'S REPORT
To the Shareholder and Board of Directors:
I have audited the accompanying financial statements of Tillsonburg Hydro Inc., which comprise the
statement of financial position as at December 31, 2013, December 31, 2012 and January 1, 2012, and
the statements of· retained earnings, comprehensive income and casti flows for the years ended
December 31, 2013 and December 31, 2012, and a summary of significant accounting policies and other
explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
My responsibility is to express an op1mon on these financial statements based on my audit. I
conducted my audit in accordance with Canadian generally accepted audit standards. Those standards
require that I comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating
overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial position of
Tillsonburg Hydro Inc. as at December 31, 2013, December 31, 2012 and January 1, 2012, and its
financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards.
April15, 2014
London, Canada
~·~
LICENSED PUBLIC ACCOUNTANT
Suite 950, 495 Richmond Street London, Eii\!F.u:ii81AA;A 5A9 • Phone: 519-672-6811 Fax: 519-672-9757
TILLSON BURG HYDRO INC.
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31.2013
(with comparative balances for the year ended December 31, 2012)
2013
Retained earnings, beginning of year $ 1,163,323
Comprehensive income for the year-Statement 3 546,693
Dividends {300,000)
Retained earnings, end of year $ 1,41!;!.016
Statement 2
2012
$ 589,297
724,026
{150.000)
$ 1,163,323
The accompanying notes are an integral part of these financial statements.
Page 9 of 25
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I
Statement 4
TILL::!ONBURG HYDRQ IN~.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED D!;~!;MBER 31,2013
(with comparative balances for the year ended December 31, 2012)
2013 2012
Operating activities
Comprehensive income for the year (Statement 3) $ 546,693 $ 724,026
Charges not involving cash
Amortization 356,191 255,020
Net change in non-cash working capital
balances related to operations (A) (!111,497) (9,670)
258,387 969,376
Investing activities
Deferred contributions in aid of construction (143,658) (49,488)
Capital asset acquisitions (net of dispositions) (1,524,859) (502,348)
Non-utility capital asset disposls (acquisitions) ll ,163 (13§,96~)
(1 ,657,054) (688,801)
Financing activities
Regulatory assets 742,015 302,097
Customer deposits-long term 12,394 41,996
Debt (119,254) (118,242)
Deferred costs 91,582 (56,238)
Return of contributed capital (note 1 0) (200,000)
Dividends paid (~QQ,QQQ) (l50,000)
226,737 j9,613
Change in cash during the year (1,171,930) 300,188
Cash and short-term investments, beginning of year 2,118,846 1,818,658
Cash and short-term investments, end of year $ !!~!MU!! $ 2,118,846
(A) Consists of changes in accounts receivable, inventory, prepaid expenses, current customer
deposits, due from (to) related parties and accounts payable and accrued liabilities.
The accompanying notes are an integral part of these financial statements.
Page 11 of25
) TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 2013
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-Accounts receivable -allowance for impairment
ii) Note 3 -Property, plant and equipment-useful lives and the identification of significant
components of property, plant and equipment
Rate setting and industrv 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.
Page 13 of 25
TILLSONBURG HYPRO INC.
NOTES TO FINANCIAL STATEMENTS
PECEMBER 31.2013
3. Significant accounting policies
The accounting policies set out below have been applied consistently in all years presented
in these financial statements and in preparing an opening I FRS financial position at January 1, 2012
for the purposes of the transition to I FRS.
Cash and cash equivalents
Cash equivalents include short-temn 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. 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.
Accounts receivable
Accounts receivable are shown net of an allowance for doubtful accounts of $117,393
(2012-$117,884 ).
lnventorv
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.
Page 15 of25
)
TILLSONBURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 2013
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 allows the
Corporation utilize GMP 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 Canadian GMP.
2. The Corporation has deferred certain retail settlement variance amounts under the provisions
of Article 490 in the OEB's Accounting Procedures handbook.
Page 17 of25
TILLSON BURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31.2013
6. Requlatorv 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.
2013 201~
Deferred costs:
Miscellaneous deferrals $ 32,571 $ 13,773
Stranded meters 29,269
Smart meters 895,51Q
61,840 909,283
Retail settlement variances (687,624) (613,408)
Recovery of regulatory assets 121.091 158,553)
Total regulatory (liabilities) assets $ !504,69;1) $ 237,322
The smart meters regulatory asset account relates to the Province of Ontario's decision to
install smart meters throughout Ontario. Starting in 2006, rates included an amount to fund a smart
meter conversion program. The amount the Corporation collects in rates is deferred to offset the
costs of the conversion program. The project was completed in 2010 and was funded by long term
debt as described in note 8. In 2012, the OEB ruled that the existing smart meter funding adder of
$2.17 expires April 30, 2012. In 2013, the OEB extended the smart meter funding adder. Final
disposition of this account was approved in the Corporation's 2013 cost of service distribution rate
application. The effect of this approval was to reallocate the net book value to the property, plant and
equipment and the recovery of these costs through future rates.
The retail service 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.
During 2013, the Corporation recognized revenues of $449,320, which are included in
distribution revenue, and expenses of $385,594, which are included in billing and administration,
related to the smart meter disposition.
Page 19 of 25
) TILLSON BURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
PECEMBER 31.2013
11. 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:
2013 2012
Income taxes -current $ 68.874 $ 67.477
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, 2013 are 15.5% (2012-15.5%)
combined federal and provincial rates on the first $500,000. The timing differences based on the
change in amortization from GAAP to IFRS based on the current applicable tax rates is not material
and therefore, deferred taxes are not recorded.
12. Net non-utility activities
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.
In addition, during 2012, the Corporation purchased 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.
13. 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.
Page 21 of 25
)
16. Subsequent event
TILLSON BURG HYDRO INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 2013
Subsequent to December 31, 2013, the OEB has conducted an audit of the Corporation's
Reporting and Record Keeping Requirements (RRR) Processes and Systems. The OEB findings are
currently in draft format and the Corporation has communicated with the OEB their overall action plan
to address the issues identified as the result of the audit.
Page 23 of 25
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This report is intended solely for the use of the Board and should not be used for any
other purposes.
Sincerely,
_A~.~
Scrimgeour & Company
Chartered Accountant
Page 25 of 25
) THE CORPORATION OF THE TOWN OF TILLSONBURG
BY -LAW NUMBER 3844
BEING A BY-LAW to confirm the proceedings of Council at its meetings held on the 19.,
day of August, 2014
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-taw;
NOW THEREFORE THE MUNICIPAL COUNCIL OF THE CORPORATION OF THE TOWN OF
TILLSON BURG ENACTS AS FOLLOWS:
1. All actions of the Council of The Corporation of the Town of Tillsonburg at its special
meeting and regular meeting held on August 19, 2014, 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 Tillson burg 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 19th DAY OF AUGUST, 2014.
READ A THIRD AND FINAL TIME AND PASSED THIS 19th DAY OF AUGUST, 2014.
MAYOR-Dave Beres
TOWN CLERK-Donna Wilson
)
)
COUNCIL RESOLUTION
AGENDA ITEM NO.: Date: August 19, 2014
RESOLUTION NO.: -..:1 __
THAT the Agenda as prepared for the Council Meeting of August 19, 2014, be adopted.
D Recorded
Vote
D Defeated D Deferred D Tabled
)
)
COUNCIL RESOLUTION
AGENDA ITEM NO.: Date: August 19, 2014
RESOLUTION NO.: --=-2 __
MOVED BY : (/ !Zr-:rjlc,;:#-
7
SECONDED BY: $!2,. ~
THAT Council move into Closed Session, to consider:
A matter in respect of which a council, board, committee or other body may hold a closed meeting under
the Act (Future of THI).
~d D Defeated D Deferred D Tabled
D Recorded vi Vote Mayor's Initials
)
COUNCIL RESOLUTION
AGENDA ITEM NO.: Date: August 19, 2014
RESOLUTION NO.: ___::::...3 __
MOVED BY: 4.4:2 ~
SECONDED BY: ;;;~d>L-:
THAT By-law 3844, to confirm the proceedings of Council at its meetings held on the 19th day of August,
2014, be read for a first and second time and this constitutes the first and second reading thereof.
D Recorded
Vote
D Defeated D Deferred A ~ Tabled
[/V Mayor's Initials
1 )
COUNCIL RESOLUTION
AGENDA ITEM NO.: Date: August 19, 2014
RESOLUTION NO.: ----=-4 __
MOVEDBY: ~~
SECONDEDBY: ~~~
THAT By-law 3844, to confirm the proceedings of Council at its meetings held on the 19th day of August,
2014, be given third and final reading and the Mayor and Clerk be and are hereby authorized to sign the
same, and place the Corporate Seal thereunto
D Recorded
Vote
D Defeated D Deferred D Tabled
M.yor's Initials