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HomeMy WebLinkAboutADMIN-7-92 v .. , THE CORPORATION OF THE TOWN OF NEWCASTLE REPORT Date: May 19 1992 File # fO~l# Ja:~. f~ Res. # /109- 7.;z; By-Law # Meeting: General Purpose and Administration Committee Report #: ADMIN. 7-92 File #: Subject: A Bill to Allow for the Expansion of the Service Area of Some Municipal Hydro Utilities Recommendations: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report ADMIN 7 - 92 be received. 2. THAT Council regards the proposed legislation to be a very significant and beneficial change which Council supports subject to the specific recommendations set out below. Specifically: 3. THAT Council supports the recommendations contained in the Report to the Newcastle Hydro-Electric Commission dated February 21, 1992 submitted to it by Mr. David Clark, its General Manager. 4. THAT Council supports the proposeu process and appeal procedures. -1 1 ,--:"7 . , " / 1 . \... RECYCLED~PAPIER PAPEfl '<:!::1 RECYCLE THIS IS PRINTED ON RECYCLED PAPER . .. .2. 5. THAT the proposed legislation should be amended to reduce the delay period before a by-law may be passed to expand the service areas of the Newcastle Hydro- Electric Commission to one year from the date on which the proposed new legislation cornes into force. 6. THAT Council supports the right of appeal to the Ontario Municipal Board of a person who requests that Council pass a by-law to further expand the service areas after the expiry of five years following the passing of a by-law to add to the service areas of the Newcastle Hydro-Electric Commission. 7. THAT Council supports the removal of the authority to reduce the service areas of the Newcastle Hydro..Electric Commission. 8. THAT the proposed legislation should be amended to make it clear that the criteria to be had regard to by Council and the Ontario Municipal Board stated in the legislation are not the only criteria that may be considered. 9. iliA T the legislation should be amended to give effect to the Commission's recommendations concerning the price to be paid fOf Ontario Hydro's retail distribution facilities which price should be reduced by any clean-up costs associated with the facilities. 10. iliAT the legislation should define the term "accumulated depreciation", 11. THAT the reasonahle cost of the Town and the Newcastle Hydro.Electric Commission of preparing studies and doing evaluations necessary to an expansion of the service areas should be reimbursed by Ontario Hydro. 12. THAT the payment of costs of absorption. training and additional benefits to employees of Ontario Hydro who transfer to the Commission should be the responsibility of Ontario Hydro. 1 'I, iu0 - 3 - 13. THA T before designating employees to be transferred to the Commission, Ontario Hydro should he required to consult the Commission and take into account its reasonable requirements with regard to its staffing. 14. 'IHA T transitional assistance as recommended by the Working Group rather than as contained in the proposed legislation should be provided by Ontario Hydro. 15. THAT Council should recommend that the legislation be amended to implement the Working Group's recommendation tbat the rural rate assistance be provided to former rural customers of Ontario Hydro within an expanded service area for the fir!;t five years following its addition to the service area of the Newcasl1e Hydro- Electric Commission. 16. 'IHAT that this report be sent to: (a) Mr. John Savage, Ministry of Energy: (b) Ontario Hydro; (c) Mr. D. Clark, Newcastle Hydro-Electric Commission; and (d) Mr. George Moore, Newcastle Hydro-Electric Commission. ll' ~ ? ""\ .", ,) ) , , - 4 - I nrrodllction 1.1 The Newcastle Hydro-Electric Commission was originally established by The Durham Municipality Hydro-Electric Service Act, 1979. It has been continued by section 9 of the Regional Municipality of Durham Act, R.S.O. 1990 c. R.9. Its service areas presently comprise the Bowmanville, Newcastle Village and Village of Orono areas. Other areas of the Town, including Courtice, are served directly by Ontario Hydro. 1.2 The Newcastle Hydro-Electric Conunission serves approximately 8,000 retail residential customers in its three service areas, while Ontario Hydro serves approximate.Jy 10,700 retail residential customers in the rest of the Town. The Newcastle Hydro-Electric Commission has 22 employees, while Ontario Hydro currently employs 33 persons whose work involves the distribution of electricity to Ontario Hydro's retail customers in the Town. The unit rates for electricity sales are different. The Ontario Hydro residential rates are approximately 7.7% higher than Newcastle Hydro-Electric Commission's rates for its residential customers in the Town. Ontario Hydro's commercial rates are 11.5% higher than the Newcastle Hydro-Electric Commission's commercial rates. As well, certain important policies of Ontario Hydro including those relative to new development differ significantly from those of the Newcastle Hydro-Electric Commission. Finally the Town's development charge by-law includes a component for the Newcastle Hydro~Electric Commission. There is not any legislative authority for either the Town or Ontario Hydro to exact a development charge in respect of growth~related capital services which are the responsibility of Ontario Hydro. 1.3 The areas of Ontario in which retail, residential customers are served directly by Ontario Hydro (in contra,t to areas in which Ontario Hydro wholesales electricity to municipal utility commissions for subsequent re~sale at retail to residential customers) comprise a single "rural power district" under the provisions of the Power Corporation Act. This no do.ubt helps keep the rural residential rates lower than ,1 ... ~ ,~ ! i U , , - 5 - racilities. ..,'~ v(hernise because of the higher costs of the rural distribution 1.4 In the first instance, the rates charged to customers purchasing electricity from Ontario Hydro in the rural power district are fixed by Ontario Hydro. The Power Corporation Act requires that Ontario Hydro forecast the rural rate differential each year for the next following year. The "rural rate differential" is the amount by which the weighted average rural bill exceeds the weighted average municipal bill (Le. in all municipalities in Ontario in which Ontario Hydro wholesales electricity, expressed as a percentage of the weighted average municipal bill. Where Ontario Hydro forecasts a rural rate differential that exceeds 15%, Ontario Hydro is required to fix discounts from the rates to be charged for electricity consumed each month in rural residential premises in the next following year so as to result in a forecast rural rate differential of 15% on a yearly basis. In 1989 the amount of rural rate assistance designed to reduce rural residential rates through a subsidy offsetting the greater costs of electrical distribution in disbursed areas amounted to amount $170.00 per year per rural residential customer. Again, the purpose is to keep the rural residential rates charged by Ontario Hydro lower than would otherwise be the case. Nevertheless. it should be noted that in the current year retail residential customers in the Town of Newcastle who are served by Ontario Hydro pay a unit rate for electricity approximately 7.7% greater than the unit rate for retail residential customers charged by the Newcastle Hydro-Electric Commission. 1.5 The moneys required to make possible the discount that Ontario Hydro is required to apply in respect of the forecasted rates in order to produce a differential not in excess of 15% of the weighted average municipal bill is raised from higher wholesale rates charged by Ontario Hydro to the municipal utility commissions who are its wholesale customers. The commissions then sell the electricity to their retail residential customers at the unit rate$ which return to Ontario Hydro the wholesale price including the money required to support the rural residential subsidy. - 6 - 12 of the current Regional Municipality of Durham Act, the Town Council with the consent of Ontario Hydro either may direct the Newcastle Hydro- Electric Commission to commence on a day specified the distribution and supply of electricity in all areas of the municipality, or alternatively, may dissolve the commission on a day specified by the by~law. On the occurrence of the dissolution date all assets under the control and management of and all liabilities of the commission and all debentures that have been issued in respect of the distribution and supply of electricity in the Town without compensation are deemed to be assets and liabilities of Ontario Hydro on the same date. Ontario Hydro is to commence to distribute and supply electricity in all areas of the municipality. 1.7 Given the positive value of the assets of the Newcastle Hydro~Electric Commission, it is very unlikely that the Town Council wouJd elect to adopt the second option just mentioned and dissolve the Commission. On tbe other hand, if Council was to direct the Commission to distribute and supply electricity throughout the Town, the Commission would be required to purchase on behalf of the Town the assets and liabilities of Ontario Hydro that pertain to the distribution and supply of electricity at retail in the Town. The Regional Municipality of Durham Act requires that the purchase price be determined in accordance with regulations and to be equal to the "original cost of the assets'l less the sum of (a) the "accumulated net retail equity" of the customers supplied with power through the assets and (b) the "accumulated depreciation" associated with the assets. The Act provides for the "original cost of the assets"; "accumulated net retail equityll and "accumulated depreciation" to be detennined in accordance with regulations. However, to date no regulations appear to have been made under the Regional Municipality of Durham Act and so, it is Dot possible to detennine how much would have to be paid for Ontario Hydro's assets if Council proceeded under it. In the event of dispute as to the amount of the purchase price, the Act provides for the dispute to be resolved by arbitration. The Act also provides for the transfer of Ontario Hydro employees to the commissions which would assume responsibility for their benefit packages. .' , 1 I - 7 - ,,">;f lllC current Regional Municipality of Durham Act, the Town of . .. ev/castle has three choices: (1) continue the present divIsion of service area responsibility between the Newcastle Hydro-Electric Commission and Ontario Hydro; (2) extend the service area responsibility of the Newcastle Hydro-Electric Conunission in a single step to include the entire Town, take over the liabilities of Ontario Hydro and acquire its assets relative to the Town at a price determined in accordance with the formula fIxed by the Act; or (3) dissolve the Newcastle Hydro-Electric Commission and in effect transfer its asset!; and liabilities to Ontario Hydro without compensation with Ontario Hydro assuming responsibility throughout the Town. Under the current Act it is not possible for the Town or the Newcastle Hydro- Electric Commission to acquire part but not all of the service area responsibility of Ontario Hydro in the Town of Newcastle. that is to extend the Commission.s service areas by two or more steps rather than a single step so as to limit the price that would have to be paid for Ontario Hydro.s assets at any time. 1.9 In January 1990. the Municipal Hydro Working Group on Extension of Restricted Municipal Hydro' SeIvice Areas was delivered to the Minister of Energy and the Minister of Munidpal Affairs. The issues examined by the Group had their origin in municipal restructuring and the reduction in the number of municipalities that began in Ontario in 1968. In many municipalities hydro distribution boundaries are not coterminous with municipal boundaries with the result that contiguous urban development may be served by two different jurisdictions at different rates and with different administrative and operational policies as well as different conditions of service. This in fact is the case in the Town of Newcastle. Studies carried out over a long period of time have supported the concept of municipal distribution of ..) - 8 - d vllCilno. However, the provisions of Regional Government statutes such as the Regional Municipality of Durham Act make the achievement of the legitimate goal of municipal utilities to serve all the electricity CUstomers within the municipalities very difficult or impossible tu obtain. Each statute makes available to area municipalities only the three extreme choices or options described in paragraph 1.8 above. 1.10 The Working Group recommended that area municipal utility commissions be permitted to expand their service areas to include the area of the municipality in two or more steps, rather than in a single step, subject to completion of a recommended review and approvals process. In order to improve the viability of utility expansions, the Group recommended that rural rate assistance be extended to the former rural residential customers of Ontario Hydro in newly expanded municipal systems for a period of five years. To minimize the cost of future expansions, the Group reconunended that Ontario Hydro should be encouraged to adopt the same conditions of service as the local utility and the two jurisdictions should involve themselves. cooperativelYI in the planning of distribution system extensions and modifications for the whole municipality. 1.11 With regard to the price for assets required to be paid by the municipal utility commissiuns to Ontario Hydro, the Group adopted the principle that transfers of customers from the rural system to municipal service areas should be done in a way that minimizes undue, non-recoverable costs to Ontario Hydro's rural system including both separation costs and boundary configuration costs. Although the Group made no recommendations regarding the price that would have to be paid by a municipal utility commission to Ontario Hydro for the purchase of the relevant assets of Ontario Hydro, as is noted above, the Group did recommend that the roral rate assistance program be extended to area munidpal utilities upon expansion for five years on a declining schedule, on a formula based on the number of assisted residential Cllstomers transferred from the rural system to the service area of the particular municipal utility commission. 1 i 1 I : ~-r - 9 - ullowmg the publication of the Group's Report, draft legislation to implement it.~ recommendations which could become an amendment to the Power Corporation Act was prepared by the Ministry of Energy and circulated to the affected municipal utility commissions and area municipalities, including the Newcastle Hydru..Electric Conunission and the Town. A meeting to assist in the understanding of the draft legislation was convened by staff of the Ministry of Energy on February 21, 1992. It was attended by Mayor Hamre, Councillor Hannah, Mr. David Clark (the General Manager of the Newcastle Hydro..Electric Commission) and Mr. George Moore (the Chairman of the Commission). 1.13 Subsequently, the Newcastle Hydro-Electric Commission adopted Mr. Clark's report to it dated February 26, 1992 in which Mr. Clark made certain recommendations regarding the draft legislation. A copy of Mr. Clark's report is contained in Attachment 1 and is referred to hereafter as the "Commission's Report". 2.0 Comments on the Draft Leaislation 2.1 A copy of the draft legislation to amend the Power Corporation Act is contained in Attachment 2. 2.2 The proposed legislation would implement the Group's Report in so far as it would permit the acquisition by the Newcastle Hydro-Electric Commission of additional service area responsibilities in the Town of Newcastle in two or more rather than in a single step. This is a very significant and beneficial change which Council should support. 2.3 The draft legislation would establish a process to be followed where Council decided to consider and ultimately determined to pass a by-law to add areas to the service areas of the Newcastle Hydro-Electric COmmission. Defore passing a by-law, Council would be required to ensure that sufficient information is made available to enable -" 1 ' I ~} - 10 - . "understand generally the proposed by-law and would be required to llOld at least one public meeting for this purpose. If Council decided to pass the by- law, a post-enactment mandatory procedure analogist to that provided in the case of zoning by-laws by the Planning Ac~ is proposed in the draft legislation. Any person may appeal to the Municipal Buard from the passing of the by-law by filing a notice of appeal setting out the objection to the by-law and the reasons in support of the objection not later than twenty days after the day on which written notice is given that the by-law has been passed. Council should support the proposed process and appeal procedures. 2.4 A very important proposed limitation on the authority of the Council is that a by_ law to add an area to the service areas of the Newcastle Hydro-Electric Commission cannot he passed until the expiry of five years from the date on which the proposed legislation Comes intu force unless both the Council and Ontario Hydro agree to the earlier enactment of the hy-Iaw. Apparently, this is intended to allow a period of time in which the necessary evaluations of the assets, liabilities and their values could be undertaken and the cost to the municipal utility commission determined. In the case of the Town of Newcastle, this delay period seems excessive. Council should recommend that the legislation be amended to reduce the delay period to no more than one year from the date on which the proposed legislation comes into force. 2.5 If a by-law is passed by Council to add to the service areas of the Newcastle Hydro- Electric Commission, after the expiry of five years from the date of passing of the last by-law, the draft legislation authorizes any person to apply to Council to amend the by. law with a right of appeal to the Ontario Municipal Board from 3 refusal or neglect by Council to deal with the request. This provision seems reasonable in the circumstances. Council should support this proposed right of appeal. 2.6 The draft legislation would prohibit the passing of a by-law to reduce the selVice areas of the Newcastle Hydro-Electric COITllll.ission on the day before the by-law is passed. The effect would be to remove the option that the Town now has of 1 1 1(.) - 11 - - . ,..;,ycastie Hydro-Electric Commission and in effect transferring its _ws~ts, liabilities and responsibilities to Ontario Hydro. Council should support this change. 2.7 The draft legislation would establish criteria that are to be reviewed in considering the extension of the service area of a commission. Both the Town and the Ontario Municipal Board would be required to have regard to the potential growth and development of the municipality over the next twenty years and the effects of the proposed service area addition on the adjoining Ontario Hydro rural retail system. 2.8 In the case of the Town, clearly these are not the only relevant considerations that should be had regard to. The ability of the Town to finance the acquisition of assets, the ability of the Newcastle Hydro-Electric Commission to manage and operate the proposed expanded system, and the impact on the electricity rates to be paid by the retail residential customers of the commission if the service areas are expanded are all factors of great significance. Council should recommend that the draft legislation be amended to make it clear that the criteria referred to above are not the only criteria that should have regard to by the municipality and the Ontario Municipal Board in considering the extension of the service areas of the Newcastle Hydro- Electric Commission. 2.9 With regard to Ontario Hydro's retail distribution facilities within the proposed expanded service area, the draft legislation would require the Newcastle Hydro- Electric Commission for the Town to acquire the fadlities within the expanded service area used by Ontario Hydro in the retail distribution of power on the day before the by-law comes into force, including equipment leased by Ontario Hydro to retail customers within the expanded service area for the use of that power. The price to be paid to Ontario Hydro is to be equal to the original cost of the facilities less the Sum of the "accumulated net retail equity" of the customers supplied with power through the facilities and the "accumulated depreciation" associated with the facilities. The tenn "accumulated net retail equity" is defined in the draft legislation ~i ~ ;- I - 12 - ", - d, ",- fJUHWfl ot the equity accumulated through debt retirement appropriations recorded for the rural power district (i.e. all of Ontario in which electricity is sold to retail residential customers by Ontario Hydro) relating to Ontario Hydro's rural retail system plus the portion of the balance recorded for the rural retail customers in the Stabilization of Rates and Contingencies Account in the . books of Ontario Hydro. Council should recommend that "accumulated depreciation" be defined in the legislation. 2.10 The price to be paid for the acquisition of Ontario Hydro's retail distribution facilities within the expanded service area in question is to be determined, therefore, by the application of a formula which on the surface appears to be similar to the formula which now appears in the Regional Municipality of Durham Act by which the price of assets in the portion of the Town now served by Ontario Hydro which is proposed to be added to the service area of the Newcastle Hydro-Electric Commission would be determined. The question is whether the fonnuls is fair to the Town. 2.11 In the Commission's Report, Mr. Clark criticized the formula a..~ one which provides Ontario Hydro with too much discretion in determining the elements that make up the price which must be paid for Ontario Hydro's retail distribution facilities within the expanded service area. He agreed tbat the formula could produce a much higher price than would be the case if the draft legislation provided for the price to be determined on the basis of the replacement cost of the facilities in question. Under the formula proposed in the draft legislation, the determination of the price which would be required to be paid would start with Ontario Hydro's book value of assets the cost of some of which (eg. underground transmission lines running through a. subdivision) have already been supported by municipal utility commission customers through the ruraJ rate assistance program discussed above. It seems unfair to require commission customers to pay twice Over for these assets. Therefore, Council should Support the first two recommendations in the Commission Report dealing with the price to be paid for Ontario Hydro's retail distribution facilities. , iU .. - i3 - 2.12 The draft legislation does not make it clear that in cases in which parts of the retail distribution facilities in the expanded service area have an actual value less than hook value or even a negative value (for example where the required cost of PCB clean-up under environmental legislation exceeds the book value of the asset in question), the price to be paid to Ontario Hydro should be reduced by the clean- up costs associated with the partiCUlar assets. These costs should be the responsibility of Ontario Hydro. 2.13 The cost of preparing the necessary studies leading to the enactment of a by..law under the draft legislation will be significant. These studies will include rate impact studies and evaluations of the retail distribution facilities within the expanded service area and their condition. The draft legislation makes no provision for these costs to be paid by Ontario Hydro or even to be shared in by Ontario Hydro. In light of the participation of municipal utility commissions in the rural rate assistance program Over the last ten years, it would be fair if the draft legis.1ation was amended and Council should recommend that it be amended to require Ontario Hydro to pay the reasonable costs of the Town and the Commission in undertaking these studies and evaluations. Council should so recommend. 2.14 Similarly, although the proposed legislation requires that the Newcastle Hydro- Electric Commission hire for at least one year Ontario Hydro employees who are agreeable to being transferred and provides that for that year their remuneration and benefits package will not be less than if they remained employees of Ontario Hydro and their ultimate pension benefits similarly will not be less on their retirement, . the draft legislation imposes the financial obligations associated with these policies on the municipal utility commission concerned. This will have a negative impact on rates that wil1 have to be charged by that conunission. Council should recommend that the draft legislation he amended to provide for the payment of costs of ab!;orption, training and additional benefits to employees of Ontario Hydro who are J!' 1, -r I_ I ;' - 14 - required to be employed by the Commission under tbe draft legislation, should be the responsibility of Ontario Hydro. 2.15 With regard to the requirement of the proposed legislation that Ontario Hydro designated employees be offered employment by the municipal utility commission concerned Council should recommend that the legislation be amended to delete Ontario Hydro's unilateral right of designation and to replace it with a requirement that Ontario Hydro must consult the municipal utility commission before exercising its power to designate and must take into account the reasonable requirements of the Commission with regard to its staffing. 2.16 The draft legislation would provide that Ontario Hydro would pay to the municipal utility commissIon transitional Support payments in declining amounts over a five year period. The amount of the assistance is to be determined by multiplying the number of rural residential premises that become municipal residential premises as a result of the expansion with the lesser of two amounts including the amount that will maintain the municipal but not less than the weighted average municipal bill determined on a province wide basis. The level of assistance runs down from 100% in the expansion year to 20% of the amount paid in the expansion year in the fourth year. 2.17 The support formula is very complex and difficult to evaluate. The amount of the financial assistance that would be available could onJy be determined as part of an analysis of a proposed expansion area. A fairer basis for transitional payments would appear to be that recommended in the Working Group's Report discussed above in paragraph 1.10 although it may not go far enough. Council should recommend that the legislation be amended to implement the Working Group's recommendation that the rural rate assistance be provided to former rural customers of Ontario Hydro within an expanded service area for the first five years following its addition to the service area of the Newcastle Hydro-Electric Commission. ~ i ',' (' U > 1.5 . -"Jndl should support the recommendations contained in the Commission.s report. All of which is respectfully submitted. ( C--;1--'-'--i:;--"',:, I' " . ) '.' J )/ l Iv llL L~,- \ \ ~ I --" Lawrence Kotseff ! I Chief Administrativel 01!ficer \ ~ 1 <-)1, ; {. i ATTACHMENT #1 TO REPORT ADMIN. 7 - 92 Fehruary 26, 1992 COMMISSION AGENDA 92:03:06 File: Finance/boundexp REPORT ON PROPOSED LEGISLATION EXPANSION OF RESTRICTED MUNICIPAL HYDRO SERVICE AREAS On Friday, Fehruary 21, 1992, the Ministry of Energy held a meeting to discuss a draft hill to allow for the expansion of the service area of some municipal hydro utilities. Newcastle is listed as one of the municipalities that is affected hy this legislation. This hill, if passed will be an amendment to the Power Corporation Act The draft addresses three recommendations arising from the Report ot the Minister of Energy and the The Minister of Municipal Affairs presented hy the Municipal Hydro Working Group on Extension of Restricted Municipal Hydro Service Areas. Those recommendations are: I) Area Municipal Hydro Commissions he permitted to expand their electrical service areas in steps, suhject to a review and approval process. 2) The period hetween houndary reviews for Area Municipal and Township Hydro Commissions not he less than five years unless Ontario Hydro, the Municipal Hydro Commission, and the Area Municipality all consent to an earlier review. 3) The rural rate assistance program be extended to area municipal utilities upon expansion, for a limited time, suggested as five years, on a declining schedule, on a formula hased on the numher of assisted residential customers transferred from the rural system to the area municipal hydro commission. All three of the recommendations are addressed in the draft hill. The proposals in the hill will make it more economically viahle for the utility to purchase the Ontario Hydro assets. However, in my opinion, the hill still favours Ontario Hydro. The following are my comments and concerns with the proposed legislation. Price of facilities purchases from Ontario Hydro is equal to original cost less sum of accumulated net retail equity and accul1!ulated depreciation. l /) .".., ~LL Ontario Hydro hook cost is not a good means of determining a transfer price hetween Ontario Hydro and llIunicipal utilities. A fair transfer price should he determined that will not lead to dysfunctional decision making. When Ontario Hydro cost is used as the transfer price. many of the rural assets will he unaffordahle to the municipal utility to purchase. If the assets are not worth hook value to the municipal utility, then the assets are also not worth hook value to Ontario Hydro. A disservice is done to the rural customer if Ontario Hydro refuses to sell at fair value of the assets as Ontario Hydro's operation and maintenance costs will he higher than the municipalities. Imposing hook value on all assets will also cause there to he more step purchases then necessary. Accumulllled net retail equity does not include the amounts paid by municipalities towards rural rate assistance. The formula for hook cost credits the net retail equity attrihutahle to the rural system against the cost of the Ontario Hydro assets. The formula fails to consider the amount in the municipal utility portion of net retail equity that has heen accumulated through rural rate assistance. This equity is significant Easily in excess of $5,000,000 of equity attrihutahle to the Town of Newcastle's rural distrihution assets has heen ignored hy failing to credit for municipal contrihutions through rural rate assistance. No provision forfunding of transitional COSH hy Ontario Hydro There will he many costs associated with the transfer of assets and employees from Ontario Hydro. The proposed legislation makes no mention of liahilities assumed for PCB handling. Transferred employees will have to he trained. Assistance limited to the lesser of rural rate assistance and amount required to reduce the municipal residential bill to the weighted average bill and reduces by 20 % each year for 5 years. I don't understand why it is the lesser of these two amounts and why it is reduced over 5 years. It would seem fair to me that a purchase price could he determined such that it would not cause the muncipal utility hill to increase significantly heyond the average municipal utility rate. Ontario Hydro unilaterally designates employees that serve the expanded municipal area and the municipal utility must offer employment to those employees for one year. This is too opened ended for my liking. The utility does not have any input into how many or who is designated. No consideration to the staff requirements of the utility is given. Municipal utility must continue to pay Ontario Hydro transfers at Ontario Hydro rate for one year. and must assume liability for past sick leave entitlement. If OMERS does not provide the same pension benfit that the Ontario Hydro Pension and Insurance Plan provided. it would appear that the muncipal utility must bear the cost of the extra benefit. ,0):: CJ Tht.: 1Tl1lnicipallltility is ohligated to pay a premium to the transferred Ontario Hydro employee. Ontario Hydro should he ohliged te) pay the costs of these premiums. A n OM B appeal procedure will he made availahle to anyone who feels that a hy-Iaw should he passed or amended with respect to the municipal utility service area.. It would he safe to assume that there will he numerous appeals to the OMS for hy-Iaw amendments. No matter where the line is drawn for expansion, there will he someone on the other side who wishes to he included. Again, if the hill would provide for a fair value of the assets to he used as the transfer price, the utility would purchase all the assets within the municipality and there would he no need for costly appeal and transition procedures. The ahove is presented for your information. Copies of the 25 page draft hill can he provided to you. 1 would suggest that the Commission should address their concerns to the Ministry of Energy. Andy Frame of the Ministry of Energy optimisticly estimated that the legislation could he passed hy June of 1992. R espectfu II X.s.u h mitted, (~i '''"'/.' I' \ ' 1_ i - ., ", \.JL~lJ:~ I .. David Clark, CMA Man~ger ') Ii L '-t ATTACHMENT #2 TO REPORT ADMIN 7-92 '. <<~~:-~ ~~ ,,::\t r'~' ,_....-~ , . ~ .~.~., ~. '.. ~:". w _ _ . ~,-, '. , .~ . ~ . .. I ~ \..\ ~~,_, I " ~ : AMENDMENTS TO THE POWER CORPORATION ~ ~ .:.:::.~ At:2u :.:':..1 A BILL TO ALLOW FOR THE EXPANSION OF THE SERVICE AREA OF SOME MUNICIPAL HYDRO UTILITIES 1. Subsection 67(12) of the Act is repealed and the following substituted: (12) Notwithstanding anything in this section, (a) no areas shall be established after the 1st day of May, 1951; (b) the boundaries of any area established before the 1at day of May, 1951, may be enlarqed or altered as set out in section 67.; .... (c) where a police village which is operating a local hydro electric .yste. established by the trustees of the police village under section 66 of the Act is dissolved and its powers for the control and management of works established for the distribution of power in the 1 '-,t ", :L.J - 2 - "'='~ ~.J..... , f-o::--. '7 · - ',., !: " J ~. , t.I",v . I r -...:.~ . r_... . "'" r.. . . .... ----.. ~. .' . \" I..~" ~ w . ::.: &:....; :.. ,.' .-- '; i.~ .. '...--: i...:- ._," I 0, '0' ~ area of such police village are transferred to a township, that area of the township beinq served may be enlarged or altered as set out in section 67A. 2 . The Act is amended by adding the following sections. 67A.(1) In this section, as in sections .67~ and 67kl "municipality" shall mean: i) a township as set out in subsection 67(12)(k); ii) the municipalities of: South-West Oxford Norfolk : West Lincoln Blandford - Blenheta East Zorra - Tavistock Zorra . i> ') .Ll. Nickel Centre Flallborough Pelham Goulbourn Georqina Uxbridqe Norwich Capreol Ancaster Hunstville Lincoln Bracebridqe Delhi ScuCJoq Gravenhurst Brock Dunnville - 3 - r;<._____. r---:.~ !- 1 (...::- ~ . -__ U.., ~J-...j "'. I aJ':...: ~ !" ... J.......'"'t. .:'.:1 I, ! .. .<. _r.L).\ I.~-': ~I I ~;.;.:~ rQ,:~ ....:.,..: Caledon Whitchurch - stouflvill. Haldimand Nanticoke ~ 1 ' I : <. I - 4 - .-t":-"'-~- ';. ',- .: ~"':':'<~....:,""'.l I. ,'J} 1- ~ ::';3 I~ .1 ~.j ('\\ ;~~., ~~ I.~ ~..... . .t:.;.....Q ~~ J..'b Newcastle North Dorchester Township westminister Township South Dumfries Township (2) A municipality, without the assent of the municipal electors, may pass by-laws describing additional areas of that municipality which shall be served with hydro-electric power by the commission of that municipality. (3) If no notice of appeal is filed under subsection (12), a by-law under subsection (2) shall come into force on the thirtieth day after the expiry of the appeal period. (4) If one or more appeals bave been filed under subsection (12), a by-law under subsection (2), as amended by the Municipal Board, shall come into force on the thirtieth day a.fter the final order of the Municipal Board is issued disposing of all the appeals_. I ;, : !~ 0 - 5 - D ~ .,~ r.~'.:';~ ~-~ . "'"' '1 ftA~~a'--!" (5) A by-law under subsection (2) shall not be passed ~or five years unless both ontario Hydro and the municipality consent to an earlier amendment. (6) If more than five years have passed since the last by-law under subsection (2) has come into force in that municipality, any person may apply to the council of that municipality requesting the council to pass or to amend a by-law under subsection (2). (7) If an application under subsection (6) is refused or the council refuses or neglects to make a decision thereon within ninety days after receipt of the application by the clerk, the applicant may appeal to the Municipal Board and the Board shall hear the appeal and may, (a) dismiss the appeal; (b) pass a by-law under subsection (2) which shall be deemed to be a by-law of that municipality; or ., 't ! - 6 - ~ ~~', L'!"'""l [-':':"'-,':~ ij ~ it . .' J l). ~ ~":', it .-~\ i. '.~"'- ;'J . (f! ,f, \ . J .11 :.. At~~t,()ta ~'" (c) amend a by-law under subsection (2) such manner as the Board may determine, and any such by-law or amendment comes into force thirty days after the day the order of the Board is issued. (8) Before passing a by-law under this section, except a by-law passed or amended by the Municipal Board under subsection (7) or (19), the council of the municipality shall ensure that sufficient information is made available to enable the public to understand generally the proposed by-law and, for this purpose, shall hold at least one public meeting, notice of which shall be given in the manner and in the form and to the persons and agencies prescribed. (9) The meeting under subsection (8) shall not be held sooner than twenty days after the requirements for the giving of .notice have been complied with and any person who attends the meeting shall be afforded an opportunity to make representations in respect of the proposed by-law. 30 - 7 - ];':N14FI'J (10) If a change is made in a proposed by-law after the holding of a meeting under subsection (9), the council is not required to give any further notice in respect of the proposed by-law. (11) Upon the passing of a by-law under this section, except a by-law passed or amended by the Municipal Board under subsection (7) or (19), the clerk of the municipality shall qive written notice of the passing of the by-law in the manner and in the form and to the persons and agencies prescribed and the notice shall specify the last day for filing a notice of appeal under subsection (12) . (12) Any person may, not later than the twentieth day after the day that the giving of written notice as required by subsection (11) i. completed, appeal to the Municipal Board by filing with the clerk of the municipality a notice of appeal setting out the objection to the by-law and the reasons in support of the objection. (13) For the purposes of subsection (12), the giving of written notice shall be deemed to be completed, ~ 1 f~ " ( .j I - . - ~ ~.. r;-. ~1 ~...] 1 , ~ '(\ I '\.")11 d " ',': ..- \" , ,'j .' ~\ t-;, t".l -a/ ...'. 1 . r ~ ~ 1&..:1 :.. . ~ ..-~ ..~. (a) where notice is given by publication in a newspaper, on the day that such publication occurs; (b) where notice is given by personal service, on the day that the serVing of all required notices i. completed: and (c) where notice is given by mail, on the day that the mailing of all required notices is completed. (14) An affidavit or declaration of the clerk of the municipality that notice was given as required by subsection (11) or that no notice of appeal was filed under subsection (12) within the time allowed for appeal i. conclusive evidence of 'the facta stated therein. (15) The clerk of the municipality, upon receipt ~f a notice of appeal under subsection (11), shall compile a record which shall include, "1 7 . I .) / . '.I' ,..__ - , - ~~"~.\ ~ Lr-~..J rz-~':=':'I' ~ t., " k"'.y t ,. 1 .1r~ .. J i l.~ . . I ~ ~ - ~ (a) a copy of the by-law certified by the clerk; (b) an affidavit or declaration duly sworn certifying that the requirements for the giving of notice as mentioned in subsection (11) have been complied with; and (c) the original or a true copy of all written submissions and material in support of the submiss~ons received in respect of the by-law before the passing thereof.' (16) The clerk shall forward the notice of appeal and the record to the secretary of the Municipal Board within fifteen days of the expiry of the appeal period and shall provide such other information or materIal the Board may require in respect of the appeal. (17) The Municipal Board shall hold a bearing of which notice shall be given to such persons or bodies and in such manner as the Board aay deteraine. A . - . i ' . .'~) - 10 - ':-,...~ ?,':'~ ~,1 ~k:~'j,~~ f; :. ~K~ /~\ - I U I ~:'-...J Ii-\.': t.A ~ J1. (18) Despite subsection (17), the Municipal Board may, where it is of the opinion that the reasons given for an appeal under subsection (7) or (12) are insufficient, dismiss the appeal without holding a full hearing but before so dismissing the appeal shall give the appellant an opportunity to make representations as to the merits of the appeal. (19) The Municipal Board may dismiss the appeal or allow the appeal in whole or in part and repeal the by-law in whole or in part or amend the by-law in such manner as the Board may determine. (20) A by-law under this section shall not have the effect of removing any area which was served with hydro-electric power by the commission of a municipality on the day before the by-law comes into force fro. the service area of that commission; (21) In considering the extension of the service area of the commission of a municipality under this section, the municipality and the Municipal Board shall have regard to the pOtential growth and development of the municipality over the next twenty years and the effects on the adjoining ontario Hydro rural retail syste.. ~ . -,) . I' 1: I . _ 'I - 11 - ,- r-"" l~ F' T Le, .... k;') /A\ , . '. f. .- ~ . ""\ 0' ~ ' ~t!A (22) on the day a by-law coau into force in a municipality under this section, the coDaission for that municipality shall acquire the retail' distribution facilities within the expanded service area of that commission used by Ontario Hydro in the retail distribution of power on the day before the by~law came into force, including equipment leased by ontario Hydro to retail customers within the expanded service area for the use of that power. (23) The price of the facilities shall be equal to the original cost of the facilities less the sum of the accumulated net retail equity of the customers supplied with power through the facilities and the accumulated depreciation associated with the facilities. (24) In subsection (22), -retail distribution facilities- means works tor the transmission and supply of power at voltages les8 than 50 kilovolts other than works located within a transformer station that transforms pOwer from voltages greater than 50 kilovolts to voltages less than 50 kilovolts. .~;' ~} - 12 - :0 I~L4J:~~i" (25) In subsection (23), "accumulated net retail equity" means the portion ot the equity accumulated through debt retirement appropriations recorded for the rural power district relating to ontario Hydro'. rural retail system plus the portion of the balance recorded tor rural retail customers in the Stabilization of Rates and Contingencies Account in the books of ontario Hydro. (26) The Lieutenant Governor in Council may, upon the recommendation of the Minister, make regulations, (a) prescribing the purpose ot subsections (8) and (11), the persons and agencies that are to be given notice and the manner and fora in which notice is to be given: (b) exempting any matter related to the expansion of the service area ot a commission under this section from the requirement of obtaining the assent of the electors of a Ilunicipality: II ~ -" ; I '.' 0 , - 13 - l}Ji;~ ;~ ~.~;:~JL~~-:~ , ~:; J'~~ lA -'~.::c 1 L::"... ~ .Ii.: .' (c) deeming any matter related to the expansion of the service area of a commission under this section to be a matter within the meaning of subsection 149(2) of the MuniciDa1 ~. 67Q.(1) If the purchase price of the retail distribution facilities of Ontario Hydro under subsection 67A(22) is not agreed upon within one year after the date on which the commission commences distributing and supplying power in its expanded service area, the commission or ontario Hydro at any time thereafter, may request that the purchase price be determined by a single arbitrator agreed on by the commission and Ontario Hydro. (2) Where a request is made under subsection (1) for a deteraination by a single arbitrator and the parties are unable to agree on an arbitrator within thirty day. after the making of the request, either of the parties may request that the purchase price be determined by a board of arbi tration. -"- - · 1 .j / - 14 - .... l- --:1 r:.--U ~.-j~ ~~'"'' \, U"-' ";~ '!:'~J !'J.~ '" JIiI , . ~ , , I ~ ~.~ ~ ~~ ... (3) Where a request is .ade under subsection (2) that the purchase price be determined by a board of arbitration, ea) within fourteen days after the request, each party to the arbitration shall appoint a person as a member of the board of arbitration and shall qive notice to the other party of the name and address of the person; (b) the two members of the board of arbitration, within ten days after the qivinq of the notice of appointment of the second of tho, shall appoint a third person to be chairman of the board of arbitration and t~e chairman sh~ll qive notice of his appointment to the parties; and . \ ! .~. Ij - - .~---- +.--- -- -- - 15 - r-:'3 ~ ~ np /'~\ \~ ~l: .'t-'-~Jr )-1 ~ ~. .0, .. (c) if a party fails to appoint a .eaber to a board of arbitration in accordance with clause Ca) or if the .embers do not appoint a chail'llan in accordance with clause (b), or in the event of the absence or inability to act or of a vacancy in the office of a member or the chairman of a board of arbitration, either party may apply on notice to the other party to the Divisional Court an~ the court may appoint the .ember or chairman. (4) Except as otherwise provided in this section, the Arbitrations Act applies to subsections (1), (2) and (3) . (5) In subsections (1), (2) and (3), -parties- means ontario Hydro and the.commission. . 0 i / - 16 - D RL=il~~:r (6) The decision of an arbitration under subsection (1) or of a board of arbitration under subsection (2) is not subject to appeal. 67k.(1) In this section, "transfer date., in relation to an employee of a municipal commission or ontario Hydro, means the date on which a commission under section 67A assumes liability for payment of the wages or salary of the employee. (2) On or before the transfer date, ontario Hydro shall designate those of its current employees who were employed in the distribution and supply of power in the municipality for at least the preceding twelve months, and the municipal commissions under section 67A shall offer employment to the employees so designated. (3) A person who accepts employment under this section is entitled to receive, for a period of one year commencing on the transfer date, a wage or salary not less than the wage or salary the person was receiving on the day nine months before the transfer date. . ,,-- I L. U .' - 17 - D:. G.~ ~~\ !~~~? .r.rt~~J. .I. (4) Each commission shall be deemed to have elected to participate in the Ontario Municipal Employees Retirement Syste. on the day this section comes into force, and a person who accepts employment under this section shall be deemed to continue or to become a member of the System, as the case requires, on the person's transfer date, and the ontario HuniciDal Employees Retirement Svstem l&t applies to the person as a member of the Syste.JI. (5) Where a person who accepts employment under this section is a contributor to The Pension and Insurance Fund of Ontario Hydro immediately before the person's transfer date, the present value of the pension earned by the person in The Pension and Insurance Fund of Ontario Hydro at the transfer date or the contribution of the person in the Fund with interest accuaulated and credited to the person in the Fund, whichever i. greater, shall be transferred to the ontario Municpal Employees Retirement Fund and the person shall be given credit in the Ontario Municipal Employees Retirement System for a period of service equal to the period of service for which he was given credit in The ontario Hydro Pension and Insurance Fund. l~ ~ .J.. , - 11 - DJR,p F? t c-,~ ....J! . ., ._. ~-'~ (6) Notwithstanding subsection (4), a person who accepts employment under this section with a commission and who, (a> was employed by ontario Hydro immediately before the person's transfer date; and (b) continues in the employment of a municipal hydro-electric commission until the person or the beneficiary of the person becomes entitled to a pension benefit, is entitled to at least the pension benefit the person would have been entitled to under The ontario Hydro Pension and Insurance Plan if the person'. years of continuous service with the commission had been additional years of continuous service with Ontario Bydro and if there had been no change in the Plan after the transfer date calculated on the basis of the wage or salary, ,paid to the person by ontario Hydro and the commission and the cost, if any, of i .' , / '~i'~ c. - 19 - Di1~ A1Ji."", ~~ .' ~w' L:j . .." ,; rJ ~ ~ , ... ~ ~ ... . lM --... ,- ~ J the pension benefit over the cost of the pension benefit to which the person is entitled under subsection (4) shall be apportioned and paid by the body and in the manner provided by the requ1ations. (7) A person who accepts employment Under this seeton is entitled as a term of the person's employment to . continue as a member of the group life insurance plan in which the person was a member with the person's former employer until the effective date of a common group life insurance covering all eligible employees of the person's new employer. (8) A person who accepts employment under this section shall continue to enjoy the rights and benefits of sick leave entitlements or sick leave insurance provided by the former employer of the person immediately before the person's transfer date Until the new employer establishes a sick leave entitlement plan or sick leave insurance plan, and thereupon the person shall receive allowance or credit for any accrued sick leave righ~s or benefits. . ) f, L l , i'i'_1 - 20 - D'QllF~ -J ~1~~ ~L '" ,,'~~ (9) Nothinq in this section prevents an employer from terminatinq the employment of an employee for cause. (10) Where, in the opinion of the Minister, a person who is designated or who accepts employaent under this section experiences any difficulty or hardship with regard to life insurance benefits, pension rights, pension benefits or sick leave rights or benefits, the Minister by order may do anythinq necessary to remedy or alleviate such. difficulty or hardship. 67g. (1) In this section, (a) -expansion year" means the year a municipal commission has the authority and undertakes to expand the geographic area in which it supplies power supplied to it by the Corporation. ~ i" ~ '1 .. Lt " , - 21 - ~~ ~ ~,.. F' ~j'" '1 .) l~\;'1 !:"\'s '4- ~ '"~ " 2l ~ . t . t:~';; a.;.;.;.; ~~...,. ~...._.., (b) "financial assistance" means the money payable by the Corporation to the municipal commission for the purposes of rate relief under this section. /" (c) "municipal commission" means municipal Corporation or municipal commission supplyinq power that is supplied to it, or them, by the corporation. (d) "municipal residential premises" means premises that are supplied with power by municipal commission and that the Corporation decides are used for residential purposes on a year-round basis. (e) "rural residential premises" means premises either individually, or in conjunction with a fara, supplied with power by the Corporation and that the Corporation decides are year-round b~Ai.. used for residential purposes on a 1 t. . '..._ i , . - 22 - ~.--:-,. .....-- ----. -~ . -.. . _..... .. ~ ....~ I .. ., ~ " .' '... I ~ ~'.; ~ J I ~ . . ,., . . : . '<:l" .; ..a · l.l ,~. ,"?"" .~ H J:l .EJ & L~ waw .Jk (2) In determining the financial assistance, the corporation shall forecast: (a) the unit amount, by dividing the forecast cost of the discounts set out in subsection 90A(3) for the next following year by the forecast of the number of rural residential premises for the same year; and (b) the weighted average municipal bill, as defined in subsection 90~(1). (3) The corporation shall provide financial assistance in the first full calendar year following expansion in an amount obtained by mUltiplying the number of rural residential premises that become .unicipal residential premises as" a result of the expansion with the lesser of, (a) the unit amount in 2(a); or !; , . ( () . , . . - 23 - ~~~f'" ! ";~ .. ......~ r---;J r::;- - -:. __. . : . J /.... , 1J.....; . L.. "~L-\ C/O> U . ~~ ~ (b) the amount that will maintain the municipal bill at not less than the amount calculated in 2(b). (4) The Corporation shall pay to the municipal commission, (a) in the first year followinq expansion, 80\ of the amount paid in the expansion year. (b) in the second year followinq expansion, 60\ of the amount paid in the expansion year. (e) in the third year followinq expansion, 40\ of the amount paid in the expansion year." (d) in the fourth year,followinq expansion, 20\ of the amount paid in the expansion year, which shall be the final payment. . , , !' . , . . - 24 - DRAFT (5) The municipal commission may use the financial assistance to reduce any, or all of its costa of operation, and apply it across all its rate classes, subject to the approval of the corporation under section 95. (6) The corporation may increase the price payable for power by municipal commissions an any of the other persons supplied by power by the corporation in order to recover any difference in revenue to the Corporati~n as a result of any expansion under section 674. (7) Subsection (6) applies notwithstandin~ any contract entered into between the corporation and a municipal commission, or other person. (8) In addition to the municipalities set out in subsection 67A(l), this section applies to the expansion of hydro electric areas in:the town municipalities under the County of Simcoe ~ct. 1990. (9) The corporation may decide for purposes of this section whether or not the premises are used for residential purposes on a year-round basis and need not hold, or afford to any person, an opportunity for a hearing before so deciding. . . , I ~d . D"'O o.f)), r<-,":'.'Il] ~.'iZiTI r~ !:...... /.;.\ lrl~. U.... . ., f.:,'.,' .. ~Ji.-~ - 25 - (10) No proceedings shall be commenced in any court or tribunal, to question, or review a forecast, or any decision respecting the use of premises referred to in this section that is made in good faith by the corporation, but this does not apply to a prcoeeding under section 37 of the Ontario Enerqy Board Act. 1 1 !. I