Tonight, it’s time to tell the truth about the failure of GMHI and Guelph Hydro

By Gerry Barker

February 15, 2017

Check out guelphspeaks.ca on Facebook and Twitter

Tonight’s meeting, starting at 6 p.m. at city hall, will be a challenge for council and the administration to tell the truth about the huge losses encountered by the Guelph Municipal Holdings Inc. (GMHI) and Guelph Hydro. And include future liabilities to the taxpayers.

It’s time for the administration to level with the people and tell them specifics about the multi-million losses that the Community Energy Initiatives cobbled together by the former mayor. Her agenda was to make Guelph a world-class leader in energy efficiency and its environmental bedfellow.

Here’s what we do know.

On May 16, GMHI CEO and CFO Pankaj Sardana, along with former CAO Ann Pappert revealed that GMHI had accumulated losses of $26,637,244 million. Both officials signed the report tendered to city council. Ms. Pappert resigned 10 days later.

On January 12, it was revealed that the former mayor had even bigger plans. GMHI secured two parcels of land in order to build two Natural Gas-fired generation plants, one in the Hanlon Park and the other downtown. The cost of these plants and the two parcels of land needed to build them have not been disclosed.

Here are the write-offs. The capital cost of the Hanlon District Energy Node of $5.1 million will be written off. With only two customers, it loses a reported $55,000 every year. The Sleeman Centre Node cost was $6.1 million with $3.6 million being written down. The Sleeman Node makes some $127,000 a year.

Next, we are not told the cost of the underground thermal energy system connected to two Tricar condominium buildings, the RiverRun Theatres and the Sleeman Centre. Instead, we are told that the thermal system, powered by the Sleeman Centre District Energy Node will continue to supply hot and cold water for heating and cooling. Again, there are no details of the cost to citizens. What does that commitment accomplish in perpetuating GMHI, at the public expense?

At this point, we should be told of the total and ongoing cost of these misguided projects now and in the future

Here’s what we don’t know.

Because of the operational secrecy employed by GMHI over four years, there are still many questions that need answers. The ultimate hypocrisy employed by GMHI was sending a so-called $1.5 million dividend to the city each year to justify its existence. It was just a return of our money while GMHI in its entire history never made a dime.

In polite circles, that would be described as a “Ponzi” scheme. Paying off the city or the city-owned Guelph Hydro with its own money.

Because the former mayor and chair of GMHI, did not allow public participation in her management of GMHI, we have been handed one of the most serious financial

operating deficits in the city’s history.

Then there is that $65 million borrowed from Guelph Hydro by GMHI. In his May report, Mr. Sardana admitted that neither GMHI nor Envida Community Energy, a subsidiary of Guelph Hydro, had any financial resources to even pay the interest on that loan.

In the 2015 Financial Information Report, the city reported that there was an “impaired” asset outstanding of $69 million. The reason the amount had increased was because there was no money in GMHI to pay the interest. Simply, there are no hard assets underlying this $69 million loan because GMHI is essentially bankrupt.

So, the city takes on this debt and lists it on its books as an asset. As the city has folded Guelph Hydro into its financial orbit, it’s only a matter of time before the “impaired” asset becomes a liability and will have to be written off by fitire councils.

The questions remain, where did the money go? Was it spent? Is it a legitimate asset of the city? Is it no longer on the Hydro books?

Is it possible that the city financial managers have conjured a plan to keep the loan off the hydro books because the council committee is preparing us for the sale/merger of our electric distribution system?

The temptation of getting its hands on the proceeds of a sale on Guelph Hydro that could reap more than $150 million to solve all its wasteful spending problems and mismanagement of our affairs.

We are not the lost tribes of Carden Street. We are all the citizens impacted by this impending bad decision.

Make no mistake. This plan is in a full court press to selloff the jewel of our city assets to right the wrongs of the past.

My advice? Only the people can stop it by pressuring the council by email, telephone, Twitter and Facebook to say no and demand the truth of what has happened to our city.

If you turn up tonight at 6 p.m. in force, council will listen.

If council fails to listen to the people, then they are all in peril in October 2018 of being re-elected.

That I can guarantee.

I know there are some coucillors who understand the ramifications of tonight’s decisions. But the majority of progressives can be defeated by the people.

I don’t know about you, but this is a no-brainer. Stop, tell the truth and lets start the process of returning Guelph to fiscal responsibility and meet those targets that almost all people want that are bring denied.

You know what to do.

 

Advertisements

9 Comments

Filed under Between the Lines

9 responses to “Tonight, it’s time to tell the truth about the failure of GMHI and Guelph Hydro

  1. Colleen

    GMHI and Guelph Hydro are two separate and distinct companies. Guelph Hydro is a very well run and profitable company. As well the issues with the two Envida projects have been resolved with the IESO, contracts have been cancelled and deposits have been returned to Envida. Can you please provide your background facts for the 69 million that you keep mentioning?

    • guelphspeaks reader

      Transparency from the City would be preferable in this situation , perhaps your demand for accountability is better directed there.

    • Colleen: The 2015 city FIR initiated and audited shows the $69 million on the city books as an impaired asset. It originated with Guelph Hydro paying GMHI the $65 million. Guelph Hydro was absorbed into GMHI. The loan was acknowledged by GMHI CEO and CFO Pankaj Sardana May 16, 2016 when he reported to council, representing the citizens who are the shareholders. To assume that GMHI and Guelph Hydro are distinct companies, the record shows that they were joined together when GMHI got control of Guelph Hydro. The reason? GMHI needed money and Guelph Hydro had the cash flow.

      The citizens are responsible for GMHI and Guelph Hydro. The city has taken over both companies that it owns. That’s where the city has parked that GMHI loan.

      This whole affair was masked by the two boards of directors thwarting any public participation. The former mayor was personally in charge of this financial disaster with the complicit participation of Guelph Hydro.

  2. Glen

    Now let’s see which members of council,have the guts to stand up for the citizens of Guelph and stop the sale or merger of Guelph Hydro? Will the fact that 2 council members of the gang of 8 were GMHI board members while all the losses piled up and are still on the board play on the conscience of council? Why would any rational person even consider selling an asset that is generating a revenue stream for the city? Can the bloc of 8 be trusted to not fritter away on covering the tracks of previous social engineering fiascos any revenue from a sale of Guelph Hydro? Not likely!
    Prior to the meeting tonite (Wed 15 Feb 17) call and/or e -mail, all members of council with the order to NOT sell Guelph Hydro.

  3. Laura

    Saldana from Guelph Hydro stated at a the Breezy Cornors townhall breakfast that Hydro makes a profit of $5 million a year. He also appeared to nix any idea that there would be a merger with Waterloo Region or Branford. So who else is close enough to merge with? Remember the proposed merger with a Hamilton that never happened because of citizen outrage and the existing state of Hamilton Hydro at that time? There is report of what happened at the town hall on the Guelph Politico blog. It seems to me that committee has failed to provide the city with information about other mergers of unities in Ontario – I.e, have they been successful what are the problems opportunities etc. Shouldn’t this have been part of there mandate? Also before exploring the option of selling why has their been no study financial implications of selling or keeping? if there has been a profit of $5 million per year what will replace this?

  4. Elaine

    I emailed all of Council and hopefully they can come together to do what’s right for this City and that is to vote NO to the sale of Guelph Hydro. It’s not too late to send off an email to all the Councillors and make your voice heard.

  5. Joe Black

    I believe city and communities are being pressured into selling off their hydro in Intario Wasaga Beach is signing petitions . Their should be an investigation.

  6. Fred

    The Committee to Rip-off the Taxpayers of Guelph and subsidize the Envida Ponzi Scheme.

    Cam, I voted for you because you were going to cut taxes and bring an end to city waste of taxpayer dollars.

    Where’s the $69 million dollars Cam?

  7. guelphspeaks reader

    From what I saw following Donaldson’s live blog of the meeting, GMHI wasn’t even discussed. You explained Hydro ownership below, Gerry, but I’m still a bit confused. The meeting was titled Council as Shareholders in GMHI regarding the SOC report recommendations. Which were to do further work on selling or merging Guelph Hydro. If Hydro is owned by the City, then why was council discussing as a GMHI shareholder? And why was GMHI not talked about, even in the context of the company council is a shareholder of?
    The other confusing part (other than the financial situation you have written about but also went untouched) is why did the SOC not include the option of how Guelph Hydro ownership could remain the same with them changing their operating model to meet the so-called threats that the report claims to lower its value?
    Of course very notable was the absence of CAO and SOC chair Derrick Thomson. Whatever was going on in Mississauga must have been awfully vital.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s