Thoughts and Opinions On Today's Important Issues

Monday, March 10, 2008

Enwin Chair's Scolding

Vic, Vic, Vic... your Letter to the Editor in the Star seemed so testy this morning. As Chair of the only electrical utility in town that serves the public, as far as I know, it could have beeen a bit more pleasant. Instead, you take a shot at your customers and owners. Can you imagine a business in a competitive environment doing that.

  • "I remain frustrated with comments from certain ratepayers that damage EnWin's reputation without regard to the many improvements made to infrastructure, customer service, and yes, to its bottom line."

Well poor you. Do you think Vic that taxpayers and customers may be frustrated too? After all the City, Enwin and WUC are all part of a happy family. Certain Councillors and taxpayers were hoping for an independent financial, business and operational audit that would shed some light on the relationship amongst the parties but instead we received a whitewash audit that told us nothing.

I am sure that you read, dear reader, the comments of Vic Neufeld, Chairman of the Board, EnWin Utilities Ltd. He scolded us:

  • "On behalf of the board of directors for EnWin Utilities Ltd., I would like to clarify a comment that indicated: "If (EnWin) is making all this money, then asking for another increase doesn't make sense."

    The article suggests there is a direct correlation between the electricity distribution rate increase and the amount of dividend paid to the City of Windsor.

    Rate increases have no bearing on dividend payouts to the shareholder. Rates are prescriptive in nature, meaning that EnWin is required to file annual rate applications with the OEB (Ontario Energy Board), using formulas established by the OEB - a formula that does not incorporate payment of dividends."

No Vic, that's not the point. Here is why people are upset:

  1. It's not the dividend that concerns people. Rather it is whether Enwin is making too much money in profits and overrecovering so that rates should not be increased.

  2. "Enwin's chief financial officer Victoria Zuber said the local utility has no cash and remains in a borrowing position, despite the dividend increase." Why then is the money being transferred to the City and not used for Enwin purposes?

  3. Why is money being borrowed? If there is a tax/accounting reason for it please let us know since, as a private company, I assume that Enwin can deduct its interest payments. There may be a financial advantage for doing so. Show us how brilliant your financial people are so that we can applaud them if that is the case and not leave such a concern outstanding. Mind you, at the same time you point out "a total debt reduction of $30M since Jan. 1, 2004" so I'm having trouble reconciling both matters.

  4. Is the real reason for the dividend transfer "If you didn't do this, well that's another one per cent increase on (municipal) taxes. It's a decision the (Enwin) board made" as Council Valentinis said. In other words, is Council hiding a tax increase by having it come through Enwin. Was the dividend a "political" decision or a "business" one?

  5. Here is what the City Treasurer said too ""(Enwin) is an asset of the city," he said. "This is normal business practice. If we didn't have it, council would have to find $4 million from other services or reduce services by that amount." Sounds like money coming out of a taxpayer's pocket and going to the City but not calling it a tax for "optics" purposes.

  6. "The "managed services" fees WUC pays Enwin also shot up by almost $1 million" which is remarkably similar to the increase in dividends. WUC was able to pay the increased fee after the WUC water rate increase that caused such controversy. Is that purely coincidental?

  7. Was the increase in dividend due to "improvement in operations." If so, where? Or did it come via WUC?

Now Vic, let us in on the big secret too if there is one. Is Enwin trying to fix up its books and to keep its good credit rating to make it easier to flog the Corporation to some third-party investor as London may be doing or to borrow against its assets? That could bring in a whole bunch of money to the City of Windsor at a time when we desperately need it. Windsorites ought to know.

Vic, you of all people should know how complicated rate setting is. I am told that Enwin is one of the two thirds of utilities across the Province that use a "mechanistic" approach to rate setting. The other one third use a cost of services approach.

I know that you're having fun with us when you talk about payments of dividends not being included in the OEB formula. That had me really confused for awhile. But what you did not tell us is that the OEB has an Audit function that periodically will audit the books of a utility to see if there is an "overrecovery." If there is, then presumably, the OEB has the ability to reduce rates even if there is a mechanistic calculation. If dividends were huge from a utility to its shareholders, one could argue that there was overrecovery. I would think that the Audit group might say to the OEB that they ought to take a look at rate increases wouldn't you think.

I want to quote to you something that was said in the Star quite some time ago about troubles at Enwin. We've never been told what the problems were. Why not? You can tell us Vic, we're almost family. We can handle it.

Oh, in passing, would you let us know how much Enwin is paying to City Council Members in 2007 for attending various Enwin Board meetings. If everything is so wonderful at Enwin, then I assume that there was hardly the need for any meetings as there was in the past so that the Members of Council would not have received very much from the Utility last year.

Here is what was in the Star:

  • "Brister, who groans at the thought of taking a public stand that will get him in hot water with the mayor and his council colleagues, sees "a number of big-dollar issues on the horizon that lead me to believe we should not be proceeding this way. I don't think we need to be spending more tax dollars on bricks and mortar at this point. In my opinion, we're going to need those funds."


    The budget chairman said he cannot provide any details but there are major issues pending involving the Windsor-Detroit tunnel and Enwin that will consume "a significant amount of taxpayer resources..."

    Brister doesn't buy the argument that the city has already budgeted $15 million for an arena and therefore the expenditure is a non-issue.

    "That logic that it's already budgeted escapes me," said the financial analyst. Compared with real needs like deficient sewers and pothole pandemics, he said an arena would be far down on his list of priorities. "Not even my 10th or 20th choice."

    He fears the city is getting involved in a project that will cost taxpayers far more than anticipated.

    "Do I believe it's going to be limited to $15 million? No way. And if we enter into a partnership with somebody, who generally ends up entertaining the risk? We do."

    I don't know about you. But it scares the daylights out of this taxpayer to hear one of the sharpest councillors, an individual who doesn't welcome controversy, sound a heartfelt warning that the city could be going in the wrong direction once again.

    Think Canderel. Think Cleary. Remember how lonely were the voices of dissent.

    If Brister is worried, we should all be more than a little edgy. And damn anxious to know what misery is coming at Enwin and the tunnel."

Just another question, Vic, is Maxess still part of Enwin or has all or part of it been sold? Just wondering since you made a comment

  • "that "non-core" assets or other business activities that did not meet this new strategic plan were re-engineered or sold off."

So Vic, save me from reading another one of your Letters unless you intend to answer some of the issues that I've discussed in this BLOG.