kAD6Z - City of Oshawa

100 Simcoe Street South, Oshawa, Ontario L1H 7M7 Tel. (905) 723-4623 Fax (905) 723-3248 contac~s@opuc.on.ca
December 22,2010
Mayor and Members of Council
The Corporation of the City of Oshawa
50 Centre Street South
Oshawa, ON
LIH 327
Dear Mayor Henry and Members of Council:
Re:
Orientation Session on Oshawa Power and Utilities Corporation
The purpose of this correspondence is to seek an opportunity to appear before Council on
January 10,2011 at a Public Teach-in for the purpose of providing an Orientation on
Oshawa Power and Utilities Corporation for the benefit of Council.
I will be accompanied by Bruce Fenton, Board Member. The Orientation Session would
include a description of ;he following topics: Mandate, Organizational Structure;
Governance and a brief review of its Operations and Performance.
I would then be available to answer any questions that Council might have.
Yours sincerely,
kAD6Z,
Irv Harrell. Chairman
---
,
Oshawa Power and Utilities Corporation
cc:
Sandra Kranc, City Clerk
Bob Duignan, City Manager
Board of Directors
Oshawa POWER AND
UTILITIES CORPORATION
2009 ANNUAL REPORT
Championing a SUSTAINABLE FUTURE
for our Customers and the Environment
TABLE
OF CONTENTS
About us..................................1
Board of Directors..........2
Infrastructure assets
we own and manage...................5
How we make a
difference........................................6
Message from thE
Chairman of the
Board and the
President and Chief
Executive Officer..............3
Our Four Pillars.........................10
What we do............................4
summary..........................................17
Financial Report.........................11
ABOUT US
Oshawa Power and Utilities Corporation (OPUC) is
an infrastructure assets holding company that provides
energy and communication related services through the
following subsidiaries:
•
Oshawa PUC Networks Inc. (OPUCN) is a
regulated utility that provides safe and reliable
electricity distribution services in the community
of Oshawa.
•
Oshawa PUC Services Inc. (OPUCS) provides a
reliable dark fiber optics communications network
within Oshawa and the Durham Region.
•
Oshawa PUC Energy Services Inc. (OPUCES)
develops, constructs and operates energy generation
assets in Ontario.
Our vision is to build
sustainable and reliable
infrastructure assets to
service the needs of our
community through the
safe work practices of
a strong, dedicated and
motivated team that takes
pride in building, owning and
managing that infrastructure.
We are pleased to present our 2009 Annual Report. This report
includes a summary of OPUC’s operational, financial and conservation
performance and our community participation.
1
BOARD OF
DIRECTORS
Irv Harrell,
CHAIRMAN
BERNIE SCHRODER,
VICE-CHAIRMAN
BRUCE FENTON
LOUIS MEEHAN, CA
ISABELLE ROBERTS
MARC A. ROSEN,
PhD, PEng
RON STEWART
JAY SWARTZ, LL.B.
2
THOUGHT
LEADERSHIP
Message from the Chairman of the Board
and the President and Chief Executive Officer
Any corporation is only as good as its employees and OPUC is no exception.
Our team is simply the best. Without a doubt, it was the dedication of our
valued team that allowed us success in 2009, despite the economic downturn.
Our team was able to enhance their focus on excellence in customer care and
ensure that the needs of both the community of Oshawa and the Region of
Durham were being met with attention to value and timelines, all of which
continues to build on the strength of this organization.
We are equally pleased to report to our shareholders that we were once
again able to meet our annual operational and financial targets. Our dedication
to our community is stronger than ever. Through company and employee
partnerships, we were able to participate in over a dozen fundraising efforts,
further strengthening our important relationship with our community. Our
Conservation and Demand Programs were equally successful, with one of
our conservation programs targeted towards small business owners not only
meeting but exceeding targets.
Irv Harrell
Chairman of the Board,
Oshawa Power & Utilities Corporation
Our approach to safety and incident management is producing the desired
results due to our proactive approach to work as a team to mitigate the risk of
incidents becoming accidents.
As for the future, our focus is to continue our strong, safe and reliable
practices to produce and deliver energy and related services to the community
of Oshawa and the Region of Durham. As an environmentally responsible
corporate citizen, we will continue to concentrate on enhancing our green
energy efforts and look forward to growing our energy generation portfolio,
which will directly benefit our shareholders, stakeholders, employees and the
local community.
We are pleased to continue with the tradition of providing steady dividends
and have declared a dividend of $1.5 million for 2009.
Irv Harrell, CHAIRMAN
ATUL MAHAJAN, PRESIDENT & CEO
3
ATUL MAHAJAN
President & CEO
WHAT WE DO
WE PROVIDE HIGH QUALITY, CUSTOMER
CENTRIC AND COST COMPETITIVE SERVICES
In modern day life, electricity has become the
prime source of energy for our society. At OPUC,
we recognize that the safe and reliable delivery
of electricity in the most cost effective manner is
essential for our commercial and industrial customers
to remain competitive and for our communities to
enjoy modern amenities powered by electricity.
In making infrastructure investment decisions, our
objective is to achieve the optimal balance between
reliability and quality of service on one side and the
cost of electricity delivery on the other. Just-in-time
and right-sized investments in infrastructure renewal
have allowed us to keep electricity prices competitive
while meeting the reliability and safety needs of our
customers and our community.
Our hard working and dedicated staff is the most
important reason behind our successes in meeting
the service-quality needs of our customers.
Every single day, we look for new ways to improve
the efficiency of our operations so our customers get
maximum value for their money while we maintain
the quality of service that we have consistently been
providing them.
4
Infrastructure
Assets
WE own and Manage
Distribution System Capacity
SERVICE AREA (SQ KM)
149
POPULATION SERVED (#)
155,000
TOTAL CUSTOMERS SERVED (#)
52,553
NEW CUSTOMERS ADDED IN 2009 (#)
377
RESIDENTIAL CUSTOMERS (#)
47,769
COMMERCIAL CUSTOMERS (#)
3,897
INDUSTRIAL CUSTOMERS (#)
518
MUNICIPAL SUBSTATIONS (#)
8
INSTALLED CAPACITY AT MUNICIPAL SUBSTATIONS (MVA)
500
44 KV FEEDERS (#)
12
13.8 KV FEEDERS (#)
46
OVERHEAD LINE CIRCUIT LENGTH (KM)
512
UNDERGROUND LINE CIRCUIT LENGTH (KM)
439
DISTRIBUTION TRANSFORMERS (#)
6,427
ENERGY SUPPLIED (KWH)
1,087,954,743
DEMAND SERVED (MW)
210
Combined Heat and Power (CHP) Generation
ELECTRICAL CAPACITY (MW)
2.4
HEATING CAPACITY (MW)
2.4
Telecommunication Network
NETWORK LENGTH (KM)
70
5
how WE MAKE
A DIFFERENCE
1. Through a dedicated team
constantly in search of
excellence.
The employees of OPUC are dedicated professionals, operating
in a business environment that asks us to perform to the best
of our ability each day. We are continually challenged by the
fast pace of change in the economy and, increasingly, in our
industry. Our ability to define and meet the changing needs of
our customers–whether they are new housing developers, home
owners or tenants, retailers, architects and engineers, large or
small customers or anyone else requiring our services–lies at
the heart of what our employees do. We make connections, at
many different levels, each day.
To work as a high-functioning team, we design, construct and
operate safe and reliable electrical distribution services for
a growing number of residential, commercial and industrial
customers. We measure our corporate progress against specific
standards and targets regularly throughout the year and
combine the measurement of individual achievements in a
formal performance management system, now entering its
third year.
We are fortunate that many members of the OPUC team have
been working together for many years, a characteristic of the
utility industry. We salute them for their dedicated service to
the company and our customers. We recognize their leadership,
mentoring skills and demonstrated creativity that will attract
other enthusiastic employees to join our team in the future.
6
2. Through keen focus on A proactive
approach to safety.
A key safety principle embraced by OPUC is a proactive approach to incident management. To achieve this, it
is critical for all employees to report incidents. When an incident is reported, we know who was involved, what
happened, and continue to ask why and how the incident happened until we have determined the root cause of
the reported incident.
We communicated our revised Incident Investigation Protocol to staff at various safety communication sessions
in June 2009. The Incident Investigation Protocol not only outlines the roles and responsibilities of the various
workplace personnel but also identifies the incident investigation process.
The most significant update to this process is the timely notification to the executive team when an incident
occurs. It is then followed up with a written incident report for review. The executive team, along with Cliff
Bruton, Manager of Occupational Health and Safety, reviews the most effective method to implement the
identified corrective measures.
The final report is reviewed with the Workplace Joint Health and Safety Committee and then communicated to
all staff at OPUC’s safety communication sessions and kept on file for auditing purposes.
Our continued success with the Incident Investigation Protocol is based on the executive team’s ongoing
commitment to foster a “no blame environment” where all incidents are reported, investigated and
communicated to staff and corrective measures are completed to prevent the incident from occurring again.
7
3. Through active participation in the community.
We truly value the time we spend in our community,
rolling up our sleeves with the citizens of Oshawa to
support those who really need our help. And, we are
very proud to say that in 2009, our dedication to our
community was stronger than ever.
In addition, we were either active participants in
or sponsors of other important causes or events,
including: The Oshawa Hospital Foundation, CIBC
Run for the Cure, Sick Kids Foundation, Friends of
Second Marsh, the Central Lake Ontario Conservation
Fund, Children’s Health Foundation and the Oshawa
Chamber of Commerce.
Through company and employee partnerships,
we were able to participate in many community
fundraisers, including: sponsoring Earth Hour,
participating in various Foundation for Building
Sustainable Community events, the Oshawa Jazz
Festival, Canada Day at the Lake and the Oshawa
Rib Fest.
We are also proud to continue to offer excellent
Conservation and Demand Management programs
(CDMs) such as Peaksaver, the Great Refrigerator
Round-up, the Electricity Retrofit Incentive program
and the Small Commercial Direct Install program,
which is targeted towards small business owners and
which was one of our greatest successes in 2009
with an increase of 105 per cent over our target of
retrofits installed.
Our employees and their children ready
to participate in the CIBC Run for the Cure.
Showcasing our CDM programs at
the Oshawa Canada Day event.
8
4. Through finding strength in diversification.
Executing on our strategic vision for sustainable growth, we are building a well diversified portfolio of
infrastructure asset businesses that are operated through our three subsidiaries.
Oshawa
PUC NETWORKS INC.
Distributes electricity
safely and reliably.
Oshawa
PUC Services INc.
Oshawa
Oshawa
PUC Energy services inc.
POWER AND UTILITIES
CORPORATION
Develops and operates economical
and environmentally sustainable
energy generation assets.
Provider of telecom services
9
FOUR
PILLARS
We believe that any successful company is built on a solid foundation. Our four pillars symbolize our
comprehensive approach to ensuring the longevity of our corporation, one that will continue to benefit our
employees, community, environment, shareholder and other stakeholders.
Commitment to team
building and
Strength in
SAFETY
DIVERSIFICATION
Belief in our
Dedication to the
COMMUNITY
ENVIRONMENT
10
FINANCIAL highlights
FOR THE YEAR ENDED DECEMBER 31, 2009
11
FINANCIAL highlights
strategic
overview
Oshawa Power and Utilities Corporation (“OPUC”
or the “Company”) and its three subsidiaries are
incorporated under the Ontario Business Corporation
Act and were formed to conduct regulated electricity
distribution and other non-regulated operations that
include energy generation and operating a fibre optic
network. OPUC is wholly owned by the Corporation
of The City of Oshawa.
OPUC’s three wholly owned subsidiaries include
Oshawa PUC Networks Inc. (“OPUCN”), Oshawa
PUC Services Inc. (“OPUCS”) and Oshawa PUC
Energy Services Inc. (“OPUCES”).
Through its principal subsidiary, OPUCN, the
Company provides regulated electricity distribution
services to businesses and residences in the service
area of Oshawa, Ontario.
OPUCN distributed electricity to over 52,000
customers in 2009.
740
53,000
710
52,500
52,000
680
51,500
650
51,000
620
50,500
Customers per Employee
590
49,500
Customers
560
50,000
49,000
530
48,500
500
48,000
2005
2006
2007
2008
2009
CUSTOMERS
CUSTOMERS PER EMPLOYEE
Customer Growth for Past 5 Years
OPUCS provides dark fibre optic network connections
to various Municipalities, Universities, Schools
and Hospitals (“MUSH”), enterprise and carrier
customers. In fibre optic communications networks,
dark fibre or unlit fibre refers to unused optical fibres,
available for use through lease agreements.
OPUCES operates a 2.4 MW natural gas fired
co-generation plant which provides electricity
and thermal energy to Durham College and University
of Ontario Institute of Technology (UOIT). OPUCES
is also actively investigating other co-generation and
green energy generation opportunities within Oshawa
and elsewhere in the province of Ontario.
regulatory
environment
Rate Setting and Regulation
The Ontario Energy Board (“OEB”) has regulatory
oversight of electricity matters in Ontario. The Ontario
Energy Board Act, 1998 sets out the OEB’s powers to
issue a distribution licence which must be obtained for
owning or operating a distribution system. The OEB is
charged with the responsibility of approving or setting
rates for the transmission and distribution of electricity
and for ensuring that distribution companies such
as OPUCN fulfill obligations to connect and service
customers.
Regulatory Assets and Liabilities
Due to the rate-regulated operations of OPUCN,
the Company is obliged to record certain amounts
in its financial statements as regulatory assets and
liabilities. Regulatory assets and liabilities are defined
by the OEB and are generally used by rate-regulated
electricity distributors to record the difference between
amounts charged to customers for consumption
12
FINANCIAL highlights
of electricity and the cost of the electricity to the
distributor. These amounts are deferred until the
manner and timing of disposition through future rates
charged to customers is determined by the OEB.
REVENUE RECOGNITION
In 2009, OPUC earned rate-regulated revenue
primarily from OPUCN and non-regulated revenue
from OPUCS and OPUCES.
OPUCN earns electricity distribution revenue,
based on a fixed monthly service charge combined
with a variable charge that reflects the consumption
of electricity by its customers. In addition to the
regulated distribution charges, OPUCN is required
to collect from its customers funds that flow through
to third-parties. These flow-through amounts include
the cost of electricity, line and connection rates, retail
transmission rates and wholesale market charges.
OPUCN also derives other revenue from the
completion of service work such as cable installations,
pole rentals for third-party communication lines and
other miscellaneous operational services.
Electricity is supplied to the grid and revenue is
earned based on the volume of electricity supplied and
the hourly Ontario electricity price. Thermal energy
is sold to Durham College and UOIT under contract
for use in heating campus buildings and domestic hot
water. The CHP plant also receives a contingency
capacity payment under contract with the OPA for
periods when it is not economical to operate the plant.
results of
operations
Regulated Revenue
The following table lists the revenue generated
by customer category from the sale of electricity,
distribution services and other services provided under
regulation for 2009 and 2008.
Customer
Category
OPUCS generates revenue by providing dark
fibre optic capacity to enterprise customers and
telecommunication carriers.
OPUCES earns revenue from its combined heat and
power (“CHP”) plant through 3 sources:
1. Electricity sales to the grid;
2. Thermal energy sales to Durham College and
University of Ontario Institute of Technology
(UOIT); and
3. A contingency capacity payment from the Ontario
Power Authority (“OPA”).
2009
($1,000s)
%
2008
($1,000s)
%
Residential
46,169
49%
43,117
47%
Commercial/
Industrial
44,968
47%
43,734
48%
Large Users
(greater than
5,000 kW)
2,727
3%
3,723
4%
890
1%
737
1%
94,754
100%
91,311
100%
Street Lighting
Total Regulated
Revenue
Electricity consumption in 2009 was less than 2008
by approximately 3%. However, when combined
with higher market rates for electricity, year over year
regulated revenue increased by approximately $3.4
million, or 4%.
13
FINANCIAL highlights
% of Revenue by Customer Type
Net revenues by service for 2009:
Revenue
Service
47.5%
48.7%
($1,000s)
Regulated distribution
and other service
0.9%
2.9%
Residential
Commercial/Industrial
Streetlighting
Regulated revenue that flows through to thirdparties, including cost of electricity, transmission and
wholesale charges, increased by $3.4 million and
totalled $74.7 million in 2009 compared with $71.3
million in 2008. Regulated revenue from distribution
and other services increased by $0.1 million and was
$20.1 million in 2009 and $20.0 million in 2008.
Total net revenue increased to $22.2 million in
2009 from $21.7 million in 2008. Net revenue for
2009 included: net electricity distribution and other
regulated revenue totaling $20.1 million (2008 $20.0 million); energy generation in the amount of
$1.0 million in 2009 (2008 – $0.8 million); and fibre
leasing revenue of $1.1 million (2008 – $0.9 million).
90.4%
Generation
1,036
4.7%
Fibre Optic
1,089
4.9%
22,224
100%
OPUC
% of Total 2009 Revenue by Service
90.4%
Regulated
Generation
Fibre Optic
total net revenue
Total net revenue includes sales from OPUCES for
generating heat and power, OPUCS’s fibre optic
network and regulated electricity distribution services
provided by OPUCN. Regulated revenue that flows
through to third-parties is recorded as sales and cost
of sales of electrical energy and accordingly is not
included in total net revenue.
20,099
Total
Large Users
% of
Revenue
4.9%
4.7%
Net operations, maintenance and
administrative expenses
Net operations, maintenance and administrative
expenses decreased by $0.6 million in 2009 to
$9.6 million, as compared with 2008. Operations,
maintenance and administrative expenses prior to costs
allocated to property, plant and equipment and billable
jobs, decreased by $1.1 million from $14.8 million
in 2008 to $13.7 million in 2009. Costs allocated to
property, plant and equipment and billable jobs that
result in a reduction to operations, maintenance and
administrative expenses decreased by $0.6 million and
were $4.1 million in 2009 compared with $4.7 million
in 2008.
14
FINANCIAL highlights
liquidity
and capital
resources
Revenues and Expenses for
the Past 5 Years
$24,000
Revenue
Expenses
$1000’s
$20,000
$16,000
$12,000
$8,000
$4,000
Cash flow from operations
$-
2005
2006
2007
2008
2009
The trend over the past five years illustrates that revenue continues to
increase while net operations, maintenance and administrative expenses
are relatively flat.
Earnings before Interest, Taxes,
Depreciation and Amortization
(“EBITDA”)
EBITDA is defined by the Company as net income
before depreciation and amortization, interest and
provision for payments in lieu of income taxes. The
Company is reporting EBITDA in the belief that it
may be useful for certain readers of the Financial
Statements as an important measure of the Company’s
performance.
During 2009, operating activities generated $8.0
million compared with $8.7 million in 2008; a
decrease of $0.7 million. An increase in working
capital was the primary reason for the decrease.
Capital Spending
Approximately $7 million was invested to enhance our
electricity distribution infrastructure.
Capital Spending by Category
73%
EBITDA for the Past 5 Years
Expansions
9%
$14,000
$ in thousands
$12,000
$10,000
$8,856
$9,915
$10,024
$11,518
$12,653
$6,000
$4,000
$2,000
2005
Enhancements
15%
Connections & Meters
Equipments & Other
Financing activities
The Company remitted shareholder dividends of $1.5
million in 2009 which was an increase of $0.2 million
over 2008.
$8,000
$0
3%
2006
2007
2008
2009
EBITDA has steadily improved over the past five years primarily as
a result of increasing revenues earned from both regulated and nonregulated activities. Net operations, maintenance and administrative
expenses have been relatively consistent over this period of time.
Shareholder Value
Shareholder value is a term used to define the
Company’s shareholder equity plus cumulative
dividends paid (unadjusted for accumulated other
comprehensive loss; that is, mid-contract gains or
losses on financial instruments used to provide interest
15
FINANCIAL highlights
rate certainty). Cumulative shareholder value as of
December 31, 2009, has increased to $48.3 million
which represents a compound annual growth rate
(“CAGR”) of approximately 11% over the past
seven years.
The following chart shows the cumulative shareholder
value for the past seven years.
Shareholder Equity & Cumulative
Dividends Paid
$50,000
CAGR = 11%
$ in thousands
$40,000
$30,000
$20,000
$10,000
$0
2003
2004
2005
2006
Shareholders Equity
2007
2008
2009
Dividends Paid
Outlook
Green Energy and Green
Economy Act
The energy sector in Ontario is undergoing
tremendous change with the passing of the Green
Energy and Green Economy Act (“GEGEA”) and with
it come significant environmental and socio-economic
opportunities, and challenges.
distribution system to renewable electricity generation
facilities. The GEGEA also allows the Ministry of
Energy and Infrastructure (“MEI”) to issue directives
to the OEB to assign energy conservation and demand
management targets to distributors which may become
a condition of the distributor’s license. The Company
may in the future be required to make additional
investments in order to facilitate renewable generation
projects and to increase the functionality and
reliability of its distribution infrastructure in order to
comply with the GEGEA. Any additional investments
made by the Company will depend to a large extent
on how it will receive funding. The Company will
continue to monitor the GEGEA along with any
associated Ministerial Directives or Regulations and
evaluate the risks and impact to its stakeholders. In
addition, potential opportunities made available to the
Company to enhance its role in Ontario’s electricity
grid development, distributed (green) energy and
conservation will be assessed. At this time, due to the
ongoing formation of policy details that need to be
finalized, the impact of the GEGEA on the operations
of OPUC have not been determined.
Smart Meter and Time of Use Billing
The provincial government has mandated the
installation of Smart Meters for all residential and
small business customers in Ontario by December 31,
2010 and the migration of all these customers to timeof-use (“TOU”) rates by summer 2011.
In response to the provincial mandate, OPUC’s
operating plan for 2010 includes a significant capital
investment for the installation of approximately
50,000 smart meters and the implementation of an
advanced metering infrastructure (“AMI”) system.
On May 14, 2009, Ontario’s GEGEA received
Royal Assent. The GEGEA requires that electricity
distributors provide priority access to the electricity
16
FINANCIAL highlights
Summary
OPUC will continue to focus on developing and
improving its distribution grid reliability, safe work
practices and customer centric culture.
The mandate to supply electricity to the residents of
the City of Oshawa continues to be the key objective
of the Company. OPUC plans to continue development
of its core business while taking an opportunistic
approach to growing other opportunities that include
renewable energy and fibre optics businesses.
The Company will continue to enhance customer
value through reliable service, competitive rates and
customer centric culture.
OPUC will take a responsible approach to new
business development that will leverage its current
strengths, comply with regulatory requirements
defined by the OEB and capitalize on opportunities
presented in its business environment. Strategically,
the Company plans to diversify its business lines by
focusing on low-risk, compatible opportunities that
offer long term stable returns for its shareholders.
17
Oshawa POWER AND UTILITIES CORPORATION
100 Simcoe Street South, Oshawa, ON L1H 7M7
T: 905-723-4623 | F: 905-723-3248
www.opuc.on.ca
Report
To:
City Council
Item:
Date of Report:
SIC-00-20 Revised August 3 1,2000
Irv Harrell, Chairperson
Strategic Initiatives Committee
File:
D-1100
Subject: BiU 35 (Energy ConipefitionAct)
Incorporation of the Oshawa hrblic Utilities Commission
1.0
Date of Meeting:
October 2,2000
Ward: All
BACKGROUND
On May 29,2000, City Council considered a report of the Strategic Initiatives Committee and
passed the following resolutions:
1. 'That City Council retain the Oshawa Public Utilities Commission and proceed with the
incorporation of the successor corporations and the transfer of the assets and liabilities 5om
the Oshawa Public Utilities Commission to the successor corporations as required by the
Electricity Act, 1998.
2. That Borden Ladner h i s LLP communicate the decision of City Council to retain the
Oshawa Public Utilities Commission to all respective bidders and the Ontario Energy Board.
3. That City Council communicate its decision to retain the Oshawa Public Utilities Commission
to the public, and that appropriate Mitten communication be given to those members of the
public that contacted the Strategic Initiatives Committee directly on this matter."
In response to Council direction, Borden La+er Gervais have prepared the necessary
incorporation documents in accordance with Council's direction of July 5,1999 to establish a forprofit business. This position of Council was confirmed in a report of the Chairperson of the
Strategic Initiatives Committee, Item SIC-99-17 dated December 1, 1999. SpecificallyCouncil
gave direction to:
1. establish a for-profit electricity distribution and default supply business to be managed by an
empowered board of directors appointed by City Council;
2. enable and encourage the board of directors to maximize the return on investment and
maximize value for the shareholder;
3. empower the board to make decisions to maximize the value of the company but with the
basic assurance in place to keep the shareholder fully informed; and
4. consider all business opportunities that would maximize benefit to the shareholder.
The purpose of this report is to seek Council approval of the Transfer By-law (Attachment No. 1)
and Shareholder Declaration (Attachment No. 2).
Report to City Council
(Continued)
2.0
-2-
!tern: ~IG-UU-zv
Meeting Date: October 2 2000
INPUT FROM OTHER SOURCES
This report has been reviewed with members of the Strategic Initiatives Committee, who are in
agreement with the direction taken. The recommendations of the Transitional Advisory Team,
chaired by the City Manager and comprised of representatives from the City Manager's Office
(including Budget Services), Legal Services and Real Estate Branch, the OPUC, Borden Ladner
Gervais and Henley International Inc, with support fiom Acres International, were integral to the
development of this report.
3.0 TRANSFER BY-LAW
The purpose of the Transfer By-law is to transfer the employees, assets, liabilities, rights and
obligations of the OPUC and the City of Oshawa to a corporation and its subsidiary corporations
under the Business Corporations Act pursuant to Section 142 of the Electricity Act, 1998. The
information contained in the Articles of Incorporation includes:
the name of the corporation;
the head office address;
the interim diectors names and addresses;
authorization for one class of common shares;
a typical "private company" restriction which prohibits the corporation f7om offering its shares
for sale to the public (this is to avoid having to comply with Securities Act regulations on the
sale of securities);
> no restrictions on the busiiness of the corporation given the Electricity Act, 1998 already
restricts the activities of Wuesco,
> the interim directors listed as the incorporatorswho sign the Articles of Incorporation; and
b a note that the incorporation is authorized by the Electricity Act, 1998.
9
9
9
b
9
The Transfer By-law is comprised of the following elements:
Corporate Structure
The Transfer By-law contemplates a holding company (Holdco) with one subsidiary - a regulated
distribution or wires company (Wiiesco). In order to operate a distribution company while also
keeping options open for any future business opportunities, it is necessary to insert a holding
company between the City as ultimate shareholder, and the operating businesses. This is a typical
corporate structure used by other municipalities and is consistent with Council's earlier direction.
Each corporation will require its own board of diectors. At this point in time, it is necessary to
establish boards of directors for Wuesco and Holdco.
I
Report to City Coun~..
(Continued)
-3-
Item: SIC-00-20
Meeting Date: October 2, 2000
Interim Boards
Until such time as the new corporate boards are in place, interim boards will be put in place on the
date of incorporation The preferred direction is to establish a blend of City and Commission
members for the interim boards for the wires (Wiresco) and holding (Holdco) companies. It is
recommended that the interim board for Wiesco be comprised of five board members as follows:
the current Chairperson of the OPUC, current Vice-Chairperson of the OPUC, the Mayor,
Councillor Harrell and the City Manager. It is recommended that the interim board for Holdco be
comprised of three members - the current Chairperson of the OPUC, the Mayor and Councillor
Harrell.
,
The tern of the interim boards will expire on December 31,2000, or at some earlier date, pending
the recruitment of the vennanent boards. The interim board members will be resvonsible for the
management of the neb corporations and will oversee the corporations until the permanent
boards are appointed. The members of the interim board wiU have all the powers, liabilities and
responsibilit%sof directors under the Ontario Business Corporation Act. ~iabiii6
insurancefor
interim board members will be provided by the City.
Recruitment of Permanent Boards
Provincial legislation prevents Wiesco fiom having a board of directors that is identical to that of
Holdco. Unless an exemption to this rule is sought and received from the Ontario Energy Board
(a pro&ss which will take some time but is most likely to be approved), the Wuesco board must
have 113 of its membership independent of the membership of the boards of Holdw and any and
all other subsidiaries. Because Holdco will have only a technical existence at this point in time, it
does not need a large slate of officers and directors. In order to preserve the 113 independence
requirement, it is recommended that Holdco be created with a 3-person board of diiectors, while
Wiesco be created with a Eperson board. The Holdco directors shall be appointed by the
Shareholder from among the members of the Wuesco board.
At the direction and approval of the Strategic Initiatives Committee, the City Manager has
selected a consultant capable of preparing a public advertisement for directors for the Holdco and
W i s c o boards, conducting a search of potential candidates and screening the applicants. It is
recommended that the City Manager liaise with the consultant and bring forward a recommended
short-list of board candidates for Council consideration. The suggested qualiications of
successll candidates are contained within the Shareholder Agreement and are outlined in Section
4.0 below.
All future appointments to the boards of Holdco and Wiiesco shall be made by theCi, as
shareholder.
Report to City Council
(Continued)
-4-
Item: slC-00-20
Meeting Date: October 2, 2000
Corporate Names
Given the existing OPUC name is well known and respected by Oshawa citizens and businesses,
the name of the new holding company and subsidiary, as recommended by the Strategic Initiatives
Committee, maintains the "OPUC" acronym but changes the name. Future name changes will be
possible but will have associated legal and administration costs related to the change of name and
logo on equipment, letterhead, cheques, etc. The proposed corporate names are:
1. For Holdco: Oshawa Power and Utilities Corporation (which can be referred to as "OPUC");
and
2. For Wiresco: Oshawa PUC Networks Inc.
Assets to be Retained by the City
It is recommended that the following property assets of the OPUC be retained by the City:
1. Four vacant properties located at Winchester Road West at Thornton; Part of 389 Bond
.
Street East; 138 Stevenson Road South; and Hillcroft Street and Trick Avenue;
2. Farewell Street Oshawa Transit garage and related property; and
3. the OPUC Head Office at 100 Simcoe Street South and related property on Metcalfe Street.
i
The OPUC has identified that the vacant sites are excess property that are dot currently used nor
are they required for the operation of the new business in the future. The Farewell Street garage is
being used by the Oshawa Transit Commission and is not related to the operation of the OPUC.
It is proposed that the OPUC Head Office located at 100 Simcoe Street South and the related
property on Metcalfe Street be retained by the City but be initially leased to the OPUC.
Asset Allocation Among Successor Corporations
It is recommended that all distribution assets and liabilities, including the transfer of easements, of
the OPUC be transferred to Wuesco with the exception of the property assets that are to be
retained by the City. Two options exist for the transfer of working capital. Option 1 is to transfer
the working capital available at the time of incorporation (approximately $19 million as of April
2000) to Wiesco. Option 2 is to transfer approximately $15.8 million in working capital, as per
the OEB working capital allowance in the rate base (based on April 2000 figures) to Wuesco and
the remaining $3.3 million in working capital to the City, to be held in a special fund, pending
clarification of the provincial legislation affecting this transfer, allowing for a 'longer term''
decision by Council. No assets are being transferred to Holdco.
Employee Allocation Among Successor Corporations
AU OPUC employees will be transferred to Wuesco.
.
~~~~
.
~~
Report to City Counc~.
(Continued)
-5-
Item: SIC-00-20
Meeting Date: October 2, 2000
Date of Incorporation and Transfer of Assets and Liabilities
It is recommended that the effective date of incorporation be October 9,2000 and the date of the
transfer of assets and liabilities to the new corporations be November 1,2000.
DebtIEquity Ratio
The ~rans'ferBy-law provides that Wuesco purchases the OPUCYsassets from the City. The
consideration to be paid by Wuesco to the City is made up of two parts:
1. Wiresco assumes the liabilities of the OPUC; and
2. After deducting the amount of the liabilities, the rest of the purchase price is divided equally to
create the 50150 long term debt to equity ratio, as currently contemplated by the OEB's
current Distribution Rate Handbook for utilities the size of the OPUC. Wuesco issues a
promissory note to the City for 50% of the balance of the purchase price (estimated at $28
million) and also issues common shares to the City for the other 5% (estimated at $28
million.)
The City tgahsfers the Wiresco common shares to Holdco. Holdco in turn pays the City for these
shares by issuing shares of Holdco in the same value to the City. As a result, Holdco owns 1W/o
of Wiresco and the City owns loo'??of Holdco. Note that the estimated value of the OPUC
liabilities, debt and equity are as of December 31,1999 and will be adjusted to reflect actual
values at the time of asset transfer.
4.0 SHAREHOLDER DECLARATION
Statement of Principles for the New Board
A Statement of Principles shall be issued to the new corporations in respect to general standards
of governance and environmental matters, to be folIowed by the board of Holdco and the boards
of its subsidiaries.
Qualifications and Terms of Directors
The Shareholder Declaration lists the qualifications of candidates for the Holdco board or any
subsidiary board. A candidate shall have sound judgement and personal integrity and may
include:
1. awareness of public policy issues related to the corporation or a subsidiary, as applicable;
2. business experience;
3. corporate board of director experience;
4. financial, engineering, legal, marketing or human resources experience;
5. regulated industry knowledge including, but not limited to, knowledge of municipal electric
utilities; and
6. a broad base of community awareness.
Appointments shall be for a 3 year term, with staggered appointments for the first term so as to
avoid a complete turnover of the boards in future years.
Chair and Vice-Chair Terms of Office
The first Chairperson of Holdco and Wiresco shall be appointed by City Council for the first term.
The Vice-Chairperson shall be elected by the Board. In future, the Chairpersods)
. . shall be elected
by the Board.
Board Committees
The Boards shall establish committees, as appropriate, with at a minimum, an.audit and finance
committee.
Compensation to Directors
The remuneration for members of the permanent board of Wuesco shall be a maximum of
$15,000 for the position of Chairperson and $10,000 for each diuector position. The Directors of
W~rescothat will also sit on Holdco will not be firther compensated. Board members will,
however, be reimbursed for mileage from member's normal place of residence or business to
board meetings based on the City's per kilometre rate. There will be no remuneration for
members of the interim boards.
City Signing Authority
The signing authority for the City of Oshawa with regard to the incorporation documents of the
OPUC shall rest with the Mayor and City Clerk.
Reports to the Shareholder
All financial and other reports, business or strategic plans, quarterly reports and budgets, as
required by the Shareholder Agreement, shall be submitted to the City Manager for review and an
appropriate synopsis to City Council.
Reporting on Major Developments
The Shareholder Declaration reauires that the Holdco Board reoort to Citv Council on maior
business developments in a timeli manner, or on any initiative that is rnateriiy significant or &y
have adverse results for the shareholder as the Holdco Board considers appropriate.
Matters Requiring Shareholder Approval
The boards of Holdco or its subsidiaries, shall not change the name of the corporation, create new
shares, amend its articles, amalgamate with any corporation, dissolve the corporation or materially
change the business of the corporation without the approval of City Council.
..
Report to City Counc,,
(Continued)
-7-
~~~~
.
.... ~.
~
Item: SIC-00-20
Meeting Date: October 2, 2000
5.0 BY-LAW TO DISSOLVE THE OPUC
On May 13, 1929, the City of Oshawa passed By-law No. 564, a by-law that created the OPUC.
With the required incorporation of the OPUC by November 7,2000, it is necessary to rescind Bylaw No. 564 It will be necessary to pass a by-law that rescinds By-law No. 564 and which will
come into effect on December 1,2000, following the November 30,2000 end of term for the
OPUC Commissioners. Note that despite the incorporation of Wiresco and Holdco earlier, it is
recommended that the OPUC Commissioners continue to receive their stipend until the end of
their tern.
6.0 COMMUNICATIONS STRATEGY
The public will be kept informed of the incorporation of the OPUC through press releases,
updates to the City's website and through a proposed letter from the Mayor, on behalf of and
authorized bv Council. to all residents and businesses. The interim board for Wiresco will be
responsible ior managing appropriate communications to OPUC staff.
7.0
CONCLUSION
Should Council concur with the recommendations of the Strategic Initiatives Committee, as
outlined in this report and as contained in the incorporation documents, the next step will be to
file the Articles of Incorporation. An executive search firm will be hired to advertise the board
posiiions and to recruit a slate of candidates. The interim boards will be responsible for the
operation of the new corporations until permanent boards are put in place later this fall.
8.0
~...
RECOMMENDED ACTION
It is recommended:
1. That City Council approve the Transfer By-law and Shareholder Declaration for the
incorporation of the Oshawa Public Utilities Commission as outlined in the report of the
Strategic Initiatives Committee dated August 31,2000, Item No. SIC-00-20 Revised, and as
attached thereto, as required by the Electricity Act, 1998.
2. That City Council approve of the transfer of approximately $15.8 million in working capital,
as per the OEB working capital allowance in the rate base (based on April 2000 figures) to
Wuesco and the remaining estimated $3.3 million in working capital to the City, to be held in
a special hnd, pending clarification of the provincial legislation affecting this transfer,
allowing for a 'longer term" decision by Council.
3. That City Council pass a by-law to rescind By-law No. 564, the 1929 by-law that created the
Oshawa Public Utilities Commission (OPUC).
4. That City Council appoint the following City and Oshawa Public Utilities Commission
members as members of the Interim Board for Wuesco - current Chairperson of the OPUC,
current Xce-Chairperson of the OPUC, the Mayor, Councillor Harrell and the City Manager.
......
Report to City Council
:
- 8-
(Continued)
Item: SIC-00-20
Meeting Date: O ~ t o b e r 2 , ~ ~ 2 0 0 0
5 . That City Council appoint the following City and Oshawa Public Utilities Commission
members as members of the Interim Board for Holdco - current Chairperson of the OPUC, the
Mayor and Councillor Harrell.
6. That City Council authorize that the members of the Oshawa Public Utilities Commission
continue to receive their stipend from the date of incorporation until the end of their term,
November 30,2000.
I& Harrell. Chaimerson
Strategic Initiatives Committee
Attach.
-
By-Law 80-2000
of The Corporation of the City of Oshawa
To authorize the Mayor and Clerk to execute a Shareholder
Declaration for its companies, Oshawa Power and Utilities
Corporation and its subsidiary. Oshawa PUC Networks Inc.
RECITALS:
1.
Pursuant to By-law Number 77-2000, the Council has authorized Oshawa Power and Utilities
Corporalion ("HoldCo") and its Subsidiary, Oshawa PUC Networks Inc. ("WiresCo")
WoldCo and WuesCo collectively referred to as the "Corporati0llsn),to be incorporated under
the Business Corporations Act (Ontario) pursuant to Subsection 142(1) of the Electricity Act,
1998 (Ontario) and Sections 71 and 73 of the Ontario Energy Board Act. 1998, (Ontario).
2.
Pursua~~~
to the Business Corporaions Acr (Ontario), the shareholders of a corporation may
enter into shareholder agreements or shareholder declarations which will thereafter govern the
corporate bodies.
3.
As sole shareholder of HoldCo, and, indirectly, of its subsidiary, WiresCo, the Council has
deemed it expedient to enter into a Shareholder Declaration in the form annexed to this
By-law.
Therefore, the Council for The Corporation of the City of Oshawa enacts as follows:
1.
The M7yor and Clerk are authorized to e x a t e a Shareholder Declaration with respect to
Oshawa's newly formed corporations, Oshawa Power and Utilities Corporation and Oshawa
PUC Networks Inc. in the fonn attached to this By-law as Schedule "A" at such time as the
corporations am incorporated.
2.
This By-law shall be deemed to have come into force and effect from the date of its passage.
By-law read a first, second and third time and f d l y passed this second day of October, 2000.
TO BY-LAW NO. 80-2000 OP THE CITY OF OSHAWA
CITY OF OSHAWA
SHAREHOLDERDECLARATION
1.
Defiition and Interpretation Section
1.1
Whenever used in this Shareholder Peclaration, unless the context requires otherwise, the
following words and terms shall have the respective meanings ascribed to them below.
"Act" means the Energy Competition Act, I998 (Ontario).
"Affiliate"shall have the meaning as defmed in the OBCA.
"City" means The Corporation of the City of Oshawa.
"City Manager" means the Manager of the City.
"Clerk" means the Clerk of the City.
"Commission" means the Oshawa Public Utilities Commission.
"Corporation" means Oshawa Power and Utjlities Corporation, incorporated pursuant to
Section 142 of the Act.
"Counci1"means the elected council of the City.
"Family Member" means a parent, spouse, same-sex partner or child as such terms arc defined
in the Municipal Conflict of Interest Act (Ontario) as amended.
"HoldCo Board" means the board of directors of the Corporation.
"1MO"means the Independent Electricity Market Operator.
"Mayor" means the Mayor of the City.
"OBCA" means the Business Corpomtions Act (Ontario) and all regulations thereunder.
"OEB" means the Ontario Energy Board.
"OEB Act" means the Ontario Energy Board Act, 1998 (Ontario) and all regulations
thereunder.
"Shareholder" means The Corporation of the City of Oshawa.
"Shareholder Declaration" means this shareholder declaration.
"Shareholder Representative"sshall have the meaning set out in Subsection 12.1.
"Subsidiaries" means the subsidiary corporations (as defined in the OBCA) of the Corporation
and includes WiresCo.
,
"WiesCo" means Oshawa PUC Networks Inc., incorporated pursuant to Section 142 of the
Act.
"WuesCo Board" means the board of directors of WuesCo.
2.
Purpose
2.1
This Shareholder Declaration outlines the expectations of the Shareholder relating to the
principles of govemce and other fundamental principles and policies of the Corporation and,
in some cases. WuesCo and any other Subsidiaries. Except as provided in Sections 12 and 15,
this Shareholder Declaration is not intended to constitute a unanimous shareholder declaration
under the OBCA or to formally restrict the exercise of the powers of the HoldCo Board or the
board of directors of any Subsidiary.
3.
Permitted Business Aclivities
3.1
Subject to the restrictions in Section 15, the Corporation and the Subsidiaries may engage in
the business activities which are permitted by any law applicable to the Corporation and the
Subsidiaries from time to time, including the Act and as the HoldCo Board or the boards of
diuectors of the Subsidiaries may authorize. In so doing, the Corporation and its Subsidiaries
shall conform to all requirements of the OEB, the IMO and all other applicable regulatory or
governmental authorities.
4.1
Dutv of Care. Dilieence and SW - As required by the OBCA, the HoldCo Board and the
board of directors of any Subsidii shall supervise the management of the business and affairs
of the Corporation and any Subsidii respectively, and, in so doing, shall act honestly and in
good faith with a view to the best interests of the Corporation or the Subsidiary respectively
and shall exercise the same degree of care, diligence and slcill that a reasonably prudent person
would exercise in comparable cbmmsmws.
4.2
Statement of Princi~les- The Shareholder expects the HoldCo Board and the board of d i i t o r s
of any Subsidiary to observe any statement of principles which may be issued by the
Shareholder, from time to time.
Without Siting the generality of the foregoing, the
Shareholder expects the following principles to be followed by the HoldCo Board and the
board of duectors of any Subsidiary:
(a)
The operation of the Corporation and the Subsidiaries is integral to the well-being and
the infrastructure of the City. The Corporation recognizes that it is in the best interests
of the City and the community that the Corporation and its subsidiaries conduct their
affairs on a commercially prudent basis, recognizing the best interest of the public and
in accordance with the financial objectives of the City as set out herein.
(c)
Distribution rates applicable to customers of WiesCo will be set by the board of
duectors of WiiesCo in accordance with the rates allowed by the OEB from time to
time.
(d)
The conduct of the business of the Corporation and the Subsidiaries is at dl times
subject to such licences, codes. policies, rules, orders, interim orders, approvals,
consents md other actions of any regulator.
The Corporation and the Subsidiaries will operate with an emphasis on customer
(e)
service.
(0
The Corporation and the Subsidiaries will operate in a safe and environmentallyresponsible manner.
The board of directors of the Corporation is responsible for determining and
(g)
implementing the appropriate balance among the foregoing principles and for causing
the Corporation and the Subsidiaries to conduct their affairs in accordance with the
same.
cotio ions for Direct6rs
5.
General
5.1
Dualifications of Directors
qualifications of candidates
- In addition to
sound judgement and personal integrity, the
for the HoldCo Board or the board of directors of any Subsidiary
may include:
(a)
awareness of public policy issues related to the Corporation or a Subsidiary, as
applicable;
@)
business experience;
(c)
corporate board of director experience;
(d)
fmancial, engineering, legal, marketing or human resources experience;
(e)
regulated industry knowledge including, but not limited to, knowledge of municipal
electric utilities; and
(f)
5.2
a broad base of community awareness. ,
R&&&x
- In selecting the members of the HoldCo Board or board of directors of any
Subsidiary, the Shareholder shall not give preference to residents of Oshawa, but shall recruit
the most qualified candidates available.
.
5.3
Chair and Vice-Chair Positions
Gh& -
(a)
The fist Chaii of the HoldCo Board and the fust Chau of the board of
diiectors for W i s C o shall be appointed by the Shareholder. Other than the fust Chair
to be appointed by the Shareholder, the HoldCo Board may elect its own Chair and the
board of diiectors of WiresCo may elect its own Chair.
(b)
Vice-Chaii
- The HoldCo Board may elect its own Vice-Chair and the board of
directors of WiesCo may elect its own V i - ~ h a ' u .
6.
Board of Directors of the Corporation
6.1
Number of Diiectors - The Corporation shall be governed by the HoldCo Board which shall
consist of three (3) members to be appointed by the Shareholder from among the members of
the W i s C o Board.
6.2
Interim HoldCo Board - The first HoldCo Board shall consist of the Mayor, Irv HarreU and the
current Chaii of the Commission (the "Interim HoldCo Board") which shall hold office until
December 31. 2000 or until such earlier time as the Shareholder shall have appointed new
diuectors to replace the Interim HoldCo Board.
7.
Boards of Directors of Sul,sidWs
7.1
WiresCo Board
- Except for the Interim Wied!o
Board as provided in Subsection 7.2,
WiresCo shall be governed by a board of directors which shall consist of five (5) members
who are not sewing members of Council or any Family Member of a sewing member of
Council, to be appointed by the Shareholder.
7.2
Interim WuesCo Board - The fmt WiresCo Board (the "Interim WiresCo Board") shall consist
i
t
y Manager;
of the fouowing tive (5) individuals (i) the Mayor; (ii) Irv Harrell; (iii) the C
(iv) the current Chair of the Commission and (v) the euwnt Vice-Chair of the Commission.
The Interim WuesCo Board shall hold oftlee until D e m n k 31, 2MX) or until such earlier
time as the Shareholder shall have appointed new directors to replace the Interim WiesCo
Board.
-
7.3 f o The number, composition, tern and
membership of the board of directors for'any Subsidiaries other than WiresCo shall be
determined by HoldCo in its capacity as shareholder of the Subsidiaries.
8.
8.1
Term of Directors
- Except for the Interim HoIdCo B o d and Interim W
i o Board, the term for the
members of the HoldCo Board and WiresCo Board shall be as follows:
tern, and two (2) directors for a two (2) year
term
and two (2) directors for a
three (3) year term;
All other future members of the W i s C o Board are to be appointed for a three (3) year
@)
tern;
The members of the HoldCo Board are to be appointed for a term to be coincident with
(c)
their term as a member of the WiresCo Board:
(d)
Any director may serve for successive terms as determined by the Shareholder; and
(e)
The Shareholder may perfom an annual review of the performance of the HoldCo
Board and the WiresCo Board, and may remove a director at any time during such
director's term in accordance with the provisions of the OBCA.
9.
Board of Director Committees
9.1
Committees - The HoldCo Board and boards of directors of any Subsidiary may establish such
committees which in thein discretion are required, which committees shall include, at a
minimum, an Audit and F i c e Committee which sball oversee the performance of the
auditors and the preparation of the financial statements of the Corporation.
10.
Directors' Compensalion
10.1 Maximum Comoensation
- Tbe Shareholder sball approve the maximum compensation for
dkeclors of the Corporation and any other Subsidiary. The compensation for directors of the
Corporation and any Subsidiary shall be determined by the respective board of directors of the
Corporation and the Subsidies within the maximum approved by the Shareholder.
10.2 --Members
of the HoldCo Board or the board of directors of any
Subsidiary, shall not refeive additional compensation for also Wing a member of the board of
directors of any Affiliate.
11.
Policies
11.1 &&&
- The Shareholder expects that as ssoon as possible after the date of this Shareholder
Declaratiox
(a)
-
Caoital Strncture the WiresCo Board will establish policies to develop and maintain a
prudent f i i a l and capitalization structure consistent with sound f m c i a l principles
and established on the basis ibat W i C o is expected to provide the Shareholder with a
reasonable rate of rehlrn;
5
'
(b)
Distribution Ra@
- the WuesCo Board
shall determine distribution rates for the
regulated distribution business of WuesCo within the range of distribution rates
permitted by the OEB;
- the WiresCo Board will establish a policy
(c)
U,
enhance Shareholder value by
generating a reasonable return:
ti)
i
(iii)
(d)
as permitted by the OEB pursuant to the OEB Act;
through the payment of dividends, interest or otherwise; aod
consistent with a prudent &mcial and capital'ition structure;
-
Cootlict of Interest the Board and the boards of directors of the Subsidiaries will
establiih a policy regarding conflicts of interest of directors; and
(e)
Eisk Manaeemeol - the WiresCo Board wiU establiih a policy to manage all risks
related to the busioess it cooducts, through the adoption of appropriate risk management
strategies and internal controls consistent with iodustry norms.
12.
Decisions of the Shareholder & Shareholder Represenm-ve
12.1 The Shareholder hereby designates the Mayor and the Clerk together as the legal
representatives of the Shareholder (the "Shareholder Representatives") for purposu of
communicating to the Board pursuant to Subsection 12.2, any consent or approval required by
this Shareholder Declaration or by the OBCA or otherwise.
12.2 Approvals or decisions of the Shareholder requited pursuant to this Shareholder Declaration or
the OBCA shall require a resolution or by-law of Council passed at a meeting of C w c i l and
shall be communicated io writing to the Board and sigoed by both of the Shareholder
Representatives.
13.
Reporting to Shareholder
13.1
Quarterlv Resorts - the C
i
t
y Manager shall receive quarterly tioaoeial and other reports from
the HoldCo Board with respect to the operatiom of the Corporation. WuesCo and any other
Subsidii and the City Manager shall review such reports and provide an appropriate synopsis
to the Shareholder to be treated as wnfdeotial intomtion.
-
13.2 Jnformation to Shareholder the City Manager shall receive copies of all busioess plans, long
range strategic plans, operating budgets, cash flow budgets and capital budgets prepared by
the Corporation, WuesCo and any other Subsidiary and the City Manager shall review such
information and provide an appropriate synopsis to the Shareholder to be treated as confidential
information.
.
statements of the Corporation, WuesCo and any oth& Subsidiary, Sucb annual financial
statements shall be provided by the City Manager to the Shareholder, for' its approval, as
required by the OBCA.
14.
Reporting on Mqjor Devalopments
14.1 The HoIdCo Board shall report to Council in a timely manner on major business developments
or materially significant or adverse d t s as the HoldCo Board, in its discretion, considers
appropriate and such reports may be received and considered by the Shareholder at an in
camera meeting of Council in accordance with the Municipal Act (Ontario).
15.
Matters Requiring Shareholder Approval
15.1 Without Shareholder approval given in accordance with Section 12, the Corporation, WiesCo
or any other Subsidiary shall not:
change the name of the corporation; add, change or remove any resniction on the
(a)
business of the corporation; create new classes of shares; or in any other manner amend
its articles of incorporation or make, amend or repeal any by-law;
amalgamate with any other corporation(s) other than amalgamations of HoldCo and the
@)
Subsidiaries or amaIgamations of the Subsidiaries which may, under the OBCA, be
approved by a resolution of d i t o r s ;
(c)
take or instilute proceedihgs for any winding up, arrangement, or dissolution of the
corporation;
(d)
apply to continue as a corponitionunder the laws of another jurisdiction;
(e)
issue, or enter into any agreement to issue, aay shares of any class, or any securities
convertible into any shares of any class, of the corporation; and
(f)
enter into any traasaction, including the acquisition or sale of assets, mergers,
amalgamations or other agreements which would result in a material change to the
business of the corporation.
15.2 Notwithstanding the provisions in Subsection 15.1(0 of this Shareholder Declaration, the
WiresCo Board may approve any saategic alliance without the prior approval of the
Shareholder.
16.
,
Reviswnr to this Declarah'on
The Shareholder acknowledges that this Shareholder Declaration may be revised from time to time as
circumstances may require and that the Shareholder will consult with the HoldCo Board prior to
completing any revisions and will promptly provide the HoldCo Board with copies of such revisions.
DATED at Oshawa, Ontario this
day of October, 2000
THE CORPORATION OF THE CITY OSHAWA
By:
Nancy L. Diamond
Mayor
By:
Brian Suer