P3ing Windsor

The comment from Windsor's CAO, John Skorobohacz, to the Auditor General during the Windsor Utilities Commission fiasco has bothered me for a long time. It really makes no sense on its face.

• "As we discussed it is in our interest that an independent audit is conducted on the recent water rate increases and that the public is provided assurances that the rate increases are warranted."

An obvious explanation for the sentence at first glance could be the desire of City Hall to have a whitewash, to cover up their incompetence. But I always felt it was something more. There has never been an issue as far as I know about money being needed for watermain replacement. The issue from a pocketbook perspective is why the increase had to be 86% today and not phased in as is happening in other jurisdictions.

I never really understood also how this "WUC" crisis developed. It just seemed to come out of the blue at a meeting that was called to justify the big increases. That in itself was unusual since when does Eddie think it necessary to justify anything that he does.

From that meeting, came all of the issues that resulted in a section 9 Ministry audit. Given the way that the Ministry is treating citizens of Windsor, it should not be a big surprise to see a limited financial audit that accomplishes what the CAO wanted to achieve.

We will find out that in fact there is a need for huge amounts of money to fix up our water mains and there is no doubt that the Commission will get a little slap on the wrist for the way they handled things to make us mere mortals happy.

The question then is what happens next. All we will see is 86% increases this year, more next year and stories about the huge sums of money that will be needed to fix up our infrastructure.

What I think is that this has all been part of a big Plan to sucker taxpayers. Let me explain.

Water, sewer, electricity. Infrastructure is worth a fortune.

The issue though is how can a Municipality cash in on it. It's like how do you cash in on the value of the equity in your house that has increased over time so that you can use the money to pay down bills or to treat as "found money" and spend on all kinds of frivolities.

The real story will gradually come out as to how Windsor will make money on its infrastructure. I am sure that I am right. The only issue is whether it will be an outright sale of our infrastructure assets for hundreds of millions of dollars or a public-private partnership lease deal with money upfront payable to the City. Just like Windsor's proposed US $75 million payment to Detroit for the Detroit half of the Tunnel.

Compare these these two stories:

WINDSOR STAR

• WUC hike biggest he’s seen
  Watermain expert says Windsor’s ‘dramatic’ increase could have been mitigated with legislation
  BY GRACE MACALUSO, STAR STAFF REPORTER
  
  Lack of provincial planning contributed to the “huge” rate increases recently imposed on Windsor water ratepayers, says Frank Zechner, executive director of the Ontario Sewer and Watermain Construction Association.
  
  Calling the 86-per-cent water rate hike recently imposed by the Windsor Utilities Commission the highest he’s heard of in the province, Zechner said the pain could have been mitigated if there was legislation compelling utilities, such as WUC, to set water rate hikes to pay for the needed watermain replacement projects — a pay-as-yougo method.
  
  “I have not seen a single increase of that magnitude in the time that I’ve been monitoring it over the last couple of years,” Zechner said Monday during a meeting with members of The Star’s editorial board. “There were allegations or suggestions they (WUC) had collected monies previously but the monies were not set aside, not in a dedicated reserve. Had they maintained a dedicated reserve there would be some funding, perhaps not sufficient, but perhaps something to offset the ultimate replacement project they have to embark upon.”

TORONTO STAR

• Water bills likely to rise by 9%
  Typical tab will increase about $47 next year
  
  Oct 17, 2007 04:30 AM, CITY HALL BUREAU
  
  Toronto householders with water meters can expect to pay $47 more for water next year – a 9.4 per cent increase – if city council approves Toronto Water's requested rates.
  
  But industries that use large volumes of water for processing will see their cost fall as the city tries to make rates more competitive with other North American cities. They'll have to meet certain conditions, including filing a conservation plan, to qualify for a lower rate.
  
  Toronto Water plans 9 per cent annual increases for householders through 2012 as it mounts an aggressive campaign to renew the city's aging water and sewer pipes.
  
  "More than half the water network is at least 50 years old and about 8 per cent is over 100 years old," said Councillor Shelley Carroll, the city's budget chief.
  
  The proposed increase – which must still be passed by council – will boost a typical household's water bill to $547, up from $500 this year, based on use of 315 cubic metres.
  
  Water rates for large apartment buildings and offices will increase about 7 per cent under the plan.
  
  Households without meters will see their rate rise 9 per cent in 2008 under the current proposal."

Now maybe I have missed the point but Toronto's water system doesn't seem to be so young. It seems comparable to that of Windsor. Their aggressive campaign to replace watermains and sewers seems comparable to that of Windsor too. Yet Toronto doesn't seem to need an increase of 86%, which is that of Windsor and which is described as the highest in the Province.

How can this be? If our Utility Commission is that incompetent that we need a price increase that is so dramatically higher than that of the City of Toronto and the rest of Ontario, we don't need a financial audit in Windsor. We need a complete investigation to find out what is really going on in the Windsor Utilities Commission!

But let's not get carried away by all of this. Remember what I speculated before. This is all scare tactics. This is to soften us up. Oh my goodness, monthly rates will increase dramatically and keep on going up, we need hundreds of millions of dollars, over $800M worth, and we need it all immediately or we won't be able to take a shower!

Wouldn't it be amazing if all of this hysteria over WUC that has been played out in the media and in the BLOGs was really designed to allow privatization of essential services and making it appear as if the public will demand that it be done. Why even Chair Lewenza will have to beat up on his union buddies to permit privatization to take place and they will thank him!

There is consolidation that is taking place in utilities business and it is going to come to Windsor. Gord Henderson already told us that we should basically scrap Enwin and start all over again. And that's what's going to happen. Isn't that the Plan? Gord's anonymous "Jim" was warning us what was coming. No wonder he badmouthed Enwin so much.

• "The way to really fix this mess, said Jim, would be to shut down WUC and Enwin Powerlines operations and hand them over, on contract, to the private sector to run on a turnkey basis."

Who needs the Capitol Theatre when we have a drama like this that takes place in the Council Chambers and we can watch it in the comfort of our own living rooms every Monday night.

Watch for a private entity organization or a pension plan like OMERS/Borealis to all of a sudden appear on the scene as our Saviour, our white knight in shining armor. That would be ironic if it was Borealis: Mike Hurst saving Eddie's bacon!

Not to worry citizens of Windsor, we will be assured, they will finance it all for the next hundred years or so. They'll replace the infrastructure, they'll run the system, they'll even reduce the amount of increase from 86% to maybe half of that. We will be ever so grateful.

Naturally they'll make a profit, a very big one. But we won't care, since we will have all this money to reduce the City's budget and to build monuments to the ego such as a new City Hall. And to squander because we're very good at that in Windsor.

You think I'm kidding. I'm not. It's coming and it is coming more quickly than we know. In fact, the Province is encouraging it to happen as the story below states. Is that why we are seeing the Ministry of Municipal Affairs audit farce that is so apparent? If so, no wonder the Government seems to want to avoid talking to citizens.

By the way, isn't Dwight Duncan the Minister of Energy and wasn't he the politician who slammed Chris Schnurr and We.ACT!

Check out this story about what Chatham-Kent Energy wants to do in London, Ontario and tell me that I am wrong. Note the hilarious comment about negotiating in secret. That works perfectly well in Windsor:

• $245M offered for London Hydro
  
  Wed, October 17, 2007, By JONATHAN SHER, SUN MEDIA
  
  Chatham-Kent Energy has offered to buy London Hydro for $245 million, the overture perhaps one of many as Ontario utilities jockey to buy, sell or merge.
  
  The offer comes less than two weeks after city council opened the doors to negotiations by formally establishing ground rules, which included reducing electricity costs but not maintaining jobs at the utility.
  
  "This will be the first of many outreaches," said Deputy Mayor Tom Gosnell, who serves as a director on the London Hydro Commission.
  
  The biggest player in Ontario, Hydro One, has expressed an interest in London Hydro, said Gosnell and Mayor Anne Marie DeCicco-Best.
  
  In 2005, a consultant estimated the assets of London Hydro were worth $246 million and a sale might raise between that amount and up to 50 per cent more.
  
  The drive to merge, buy or sell is the product of several things, industry experts say.
  
  In the long-run, it's expected utilities will have to buy electricity themselves, a complicated endeavour that carries with it the risk of securing too much or too little, said John Todd, president of Elenchus Research Associates Inc. in Toronto.
  
  Larger utilities will be better positioned to navigate that market, using their size to negotiate rates and their expertise to judge when and how much to buy, said Todd, who has testified hundreds of times before energy boards across Canada.
  
  The province has created an incentive for deals by waiving a 33-per-cent transfer tax on sales of utilities until Oct. 17, 2008.
  
  While that window may be extended or opened again, its existence may spark discussion, Todd told The Free Press a few weeks ago.
  
  But while the offer by Chatham-Kent Energy surprised no one, its form -- in a public letter to the mayor -- caught Controller Gord Hume off-guard.
  
  "I'm not sure why it would have come to the mayor and as a public document. I would have thought it would be negotiated (behind doors). It's not the way I've done business in the past," Hume said.
  
  But DeCicco-Best said she appreciated the up-front offer, which lays out a number of options that Chatham-Kent Energy -- and its private minority partner Corix -- want to pursue.
  
  Chatham-Kent Energy CEO Raymond Payne said he needs to know if council, on behalf of Londoners, has some interest before he commits time and resources into negotiations.
  
  Chatham-Kent and Corix want to expand the utility so it becomes the dominant utility in Southwestern Ontario, he said.
  
  In their drive to do so, the biggest competitor is London Hydro, he said.
  
  Don't expect a decision tomorrow when the offer goes to the city's board of control , DeCicco-Best said.
  
  "We'll want to refer this to London Hydro's working group," she said.
  
  The mayor acknowledged she's skeptical about selling London Hydro and losing local control over the utility but said she wants to keep an open mind.
  
  "($245 million) is a lot of money but, at the onset, I wouldn't want us to look at that number and make a (quick) judgment," she said.
  
  OFFER OPTIONS
  
  A letter to London Mayor Anne Marie DeCicco-Best from Chatham-Kent Energy -- and its private partner Corix -- lays out a number of options the potential buyers of London Hydro want to pursue:
  
  - Buying London Hydro for $245 million and also giving $1 million to support London-based community groups foundations and $2 million to help create jobs in those organizations.
  
  - Buying London Hydro for less than $245 million and leasing its assets to the city.
  
  - Buying some of the assets of London Hydro but leaving the city of London with majority control of the utility.
  
  - Becoming an investor and buying shares in London Hydro -- right now the city of London is the sole shareholder.

Do you see what I mean. Nothing in Windsor is simple. Nothing in Windsor can ever be taken at face value. Be aware for what is lurking in the shadows.