Lots of pieces left to puzzle in Festival Hydro restructuring

CONNOR LUCZKA, Local Journalism Initiative Reporter

Work continues towards a corporate restructuring of Festival Hydro, the City of Stratford’s local distribution company (LDC).

The goal of the restructuring, as chief administrative officer (CAO) André Morin said, is rather than the city owning both Festival Hydro Inc. and Festival Hydro Services Inc. separately, it would be the sole shareholder of a new holding company, which would own the two organizations. Through this ownership model, it would allow for the equity and expertise of the Festival Hydro network to be leveraged, meaning reinvestment or expansion could be done, increasing revenue for the city and easing the burden on taxpayers.

“The question is, why do we need to go down this this path?” Morin told Stratford city council at its Aug. 10 meeting, when the matter was up for debate. “Again, one of the challenges, like we were talking about earlier in regards to asset management, is LDCs have aging infrastructure. There's infrastructure needs, and certainly there's a push to look at these LDCs. Are they sustainable moving forward on an as-going basis? And the idea behind is that if you have economies of scale, bigger LDCs, you can provide better rates to our citizens in regards to hybrid services. And the question is, do we want to be a buyer or do we want to be a seller?

“… We have opportunity to sell our LDC, and then again take those resources. But then again, that is now run by somebody else, some other company. Or do we want to set ourselves in the position where we have the opportunity to expand upon the regulated businesses like that? We have opportunities to purchase or exceed into other markets around that front. So that's the regulated business side. And having a structure like this provides us opportunities on how to do that, partner, and have different opportunities around that scenario, that type of strategic scenario. The other scenario, of course, is … (are) there other markets we want to get to on the non-regulated side that can create either financial, economic, or other benefits for the city, for the community as we move forward, while also protecting and preserving the assets we own and also limiting the liabilities?”

The exact phrasing and technicalities are still yet to be worked out, a detail that was criticized by members of the public. In response to the agenda’s publication, local advocacy group Get Concerned Stratford published its concern over what it called a lack of transparency.

“This is not a routine administrative adjustment,” said Sharon Collingwood of Get Concerned Stratford in a media release. “Festival Hydro is a public asset. Decisions about its corporate structure, financial risk, business expansion, debt, dividends, and possible future partnerships belong in an open and transparent public process. We shouldn’t be signing a deal before we know what’s in it. What’s the rush?”

“This plan for restructuring is not a wholesome plan at the present time and should give the residents and council much more information before being voted on to accept it,” resident Jane Marie Mitchell said in her delegation on Aug. 10. “It seems very rushed and very incomplete and why would you pass any resolution where its details were not spelled out because we all know that the wording of details very much matters. This leaves me with so many more questions than answers and we all should be aware of the answers first. The restructuring plan should be in plain language for all citizens to understand and not just for people in financial circles.”

While not directly responding to Get Concerned Stratford or the delegation, Coun. Mark Hunter called the restructuring a “fairly simple thing.”

“It’s just got complicated paperwork,” Hunter said. “… The restructuring itself is not really a complicated process. There are a lot of hoops to jump through, and there's a lot of information which makes it seem far more complex than it really is. I support this move. I see it as a positive for our city.”

Ultimately, council voted to proceed with the work towards restructuring, after amending the motion to require council to have final approval once the CAO and city solicitor have created a draft with Festival Hydro leadership. Only Coun. Cody Sebben opposed the motion (Couns. Lesley Biehn and Brad Beatty were absent).

“‘The city wants to utilize the equity and expertise to leverage further growth and opportunities,’” Sebben read. “… I read that, and you could change the word: the city wants to risk the equity, in my mind, and because we're going to be taking money in theory and using it to make investments that will hopefully work out, but may not always. And if you were to ask me, would I like to use the equity of the city or an asset to try to leverage further growth? I wouldn't.”

Though, as Coun. Taylor Briscoe said, it is a frontier that could pay off for Stratford’s taxpayers.

“Municipalities, compared to other levels of government, actually have very few levers to pull for revenue generation and this is a very innovative way that, when we are seeing that increased downloading, that increased priorities – very expensive priorities – that we all have now as municipalities, this is a very innovative and kind of frontier way for our city to generate revenue and keep taxes stable, if not lower.”