The secrecy and deception behind Collingwood’s utility sale

Shady dealsMeetings held behind closed doors late into the night. Personal vendettas. Kickbacks. Conspiracy theories. Scams and phony reports. Backroom deals. Unethical politicians conniving. Dubious legality. Shady characters pulling strings from the shadows. Scheming. Minions acting like thugs. Cowardice. Hidden contracts. Lies and deception. A deal they can’t refuse. A financial shell game. The betrayal of public trust.

If that sounds like the ingredients for a crime novel, to me it reads like Collingwood Council’s secretive, unethical “process” to sell our public utilities. The public was betrayed by The Block. The process has a stench of corruption about it. And don’t say I didn’t warn you.

Monday night, The Block voted to sell our electrical utility; only the remaining two ethical and honourable members of council – Mayor Cooper and Councillor Lloyd – voted against the deal. And what a “deal” it is – crafted in secret, without any public consultation or input, and giving away the keys to the candy store to a for-profit buyer. It screws Collingwood. What little we know about it only illuminates the devious scheming that went on behind it. For example:

Other terms of the sale include a 25-year lease of the Collus PowerStream property and operations centre from the Town, job and location guarantees for Collus PowerStream employees, and a contribution of $150,000 towards the Waterfront Master Plan, one of the community’s biggest priorities, as identified in the Community Based Strategic Plan.

Since when does a utility sale become contingent on a “contribution” for an unrelated project like the waterfront? When you buy a car, do you have to “contribute” to the dealership’s coffee fund? Or to the salesman’s kid’s little league uniforms? Sure sounds like blackmail to me. And who signs a 25-year lease for anything, let alone an old, outdated building without any commitment by the owner to upgrade or maintain it?

And will the OEB permit a utility sale to be contingent on a 25-year lease? Or a kickback for the waterfront? My industry sources suggest not.

Council “offered” the share sale to its partner, Alectra simply because the shareholders’ agreement (USA) required it. Alectra already offered to buy it earlier this year (outside the RFP process; the amount undisclosed, but industry contacts suggest the offer was likely $10-11 million) but The Block turned them down. Without saying why, of course. But we know they were already in bed with EPCOR.

The latest price demanded by the town is highly inflated – it includes unrelated items to bump up the asking price by $2-3 million (or more) above the actual value. Why? Because The Block want the municipally-owned, Ontario-based Alectra to refuse so the town can buy it back and then sell the whole thing to the out-of-province, for-profit EPCOR:

If Alectra opts to buy the Town’s shares at the same price as EPCOR has offered, Alectra will become the sole owner of the utility. If Alectra opts to sell its shares, EPCOR will become the sole owner of the utility.

See? It’s already decided. EPCOR wins. The deal was made behind closed doors.

That’s a direct quote from the town’s own media release. This whole deal was connived in secret to sell it to EPCOR, without any public discussion, much less consultation. It’s very dirty; from my viewpoint, it’s negotiating in bad faith with our existing partner. If this isn’t corruption, then the definition has been changed since I was in office.

EPCOR will get $1 million even if Alectra buys it. That’s $1 million of YOUR money paid out as a kickback. Plus the town has agreed to pay a portion of EPCOR’s legal fees. Why? As the Connection reported, that was one of those sleazy backroom deals The Block cut:

If Alectra chooses to buy the town’s shares, $1 million would be transferred to EPCOR for their time during the process. Rodger said the town would pay a portion of the legal fees for the deal, as would the purchaser.

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Collus in purgatory

PurgatoryPurgatory is how a staff person described to me the current situation of our local electrical utility, Collus-PowerStream (CPS). It’s the result of The Block’s and the administration’s incessant interference, manipulations, contrivances and scheming over the past three years. And it was evident, Wednesday, at the meeting where CPS presented its draft Distribution System Plan, a strategic plan for future maintenance and growth.

They’re in purgatory because The Block have made the utility’s future uncertain. They cannot accurately craft business plans, strategic plans, cannot make any long-range plans for growth or sustainable development because they never know what new hurdle or attack The Block will throw at them. For three years CPS staff have weathered assaults on their revenue stream, their employees, their services, their morale, their partnership with both PowerStream and the town, their board, their integrity and their ownership. The Block have done everything in their power to make the lives and work of the employees hell. And they’ve been very effective at it. Some employees have had to take stress leave as a result of the bullying.

And now with The Block about to privatize our utility – without, of course any public discussion let along consultation – CPS is in a real quandary. The Ontario Energy Board (OEB) requires utilities to create and share with the public these system plans that reach five years into the future. But if you don’t know day-to-day what will happen with your ownership, your rates, your board, or your revenue, how can you create a realistic plan for tomorrow, let alone the future?

But CPS has to do it, and Wednesday’s presentation was part of that requirement. Which meant it, by necessity, was long on generalities but short on specifics (I believe they will be provided in subsequent public presentations). The invitation (sent to all members of council) read:

Collus PowerStream Corporation is pleased to present an overview of its draft Distribution System Plan (DSP) of planned investments in its electrical distribution infrastructure to service present and future customers from 2018 to the end of 2022. The investments are designed to provide timely value to customers by aligning reliability and service quality with customer expectations.
Customer and other stakeholder input over the years has influenced these planned investments. The draft DSP gives all stakeholders the opportunity to review and comment on it. Collus PowerStream welcomes feedback on the proposed investment plan to help Collus PowerStream maintain acceptable levels of service and ensure plan alignment with customer needs and expectations.
Collus PowerStream believes that feedback received on this consultation through two-way communication will further enhance existing relationships with our customers and other stakeholders, and help achieve positive value-added outcomes that support the Ontario Energy Board’s regulatory objectives for the electricity distribution sector.

Of nine members of council, only two had the courtesy to attend this important presentation: Councillors Edwards and Doherty.* The latter was there because she is the Blockhead on the CPS board, appointed in lieu of an actually qualified person (numerous applicants evidently proved too intimidating by their qualifications to appoint). Doherty is she of the “what’s a dividend?” comments.

The mayor and Councillor Lloyd were both out of town on previously arranged vacations. As for the rest – all of them members of The Block – what was their excuse for not attending? Disdain? Arrogance? Disrespect? Willful ignorance? Perhaps all of these. These attributes define The Block and have been expressed towards our utility and its staff (and our hospital) in the past.

It might have been their nap time, too (although at least one prefers to snooze during council meetings…). Or perhaps there were scared off by the very idea of public engagement and feedback – the bete noir that threatens their beloved culture of secrecy.

Am I being too harsh expecting our elected representatives to actually do the job we pay them for (and for which they’ve given themselves a pay raise THREE times already and are planning  fourth)? 

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The secret costs of the EPCOR deal

Scheming BlockheadsWhether or not The Block sell our share of our public electrical utility to the for-profit, Edmonton-based EPCOR, it will still cost taxpayers millions. And I don’t mean just the rising costs of sole-sourced lawyers and buddy consultants the administration has hired (well over $1 million already, and the bills keep coming in). I’m talking about the hidden costs The Block won’t divulge because they don’t want taxpayers to realize how really bad a deal they’ve made with this devil.

And it all happens behind closed doors, Monday, Oct. 23, 2017. No public input allowed on the sale of our own utility. The Block intend to privatize our utility without informing the public of the costs or the consequences.

My industry sources tell me there are many costs associated with the sale that will be built into the selling price, but paid back to the buyer after the sale. In other words: it’s a shell game. We taxpayers will pay the buyer’s costs and their fees, but these will be hidden in the contract, which will be kept secret, so you won’t know what they really are. Sneaky and underhanded – The Block’s way.

Let’s start with the transfer tax: the Ministry of Finance applies a 22% tax to sales made to out-of-province buyers. So if the sale of the town’s share is $8 million as it was in 2012, the MoF will demand a $1.76 million transfer fee. But the buyer will probably offer more, an inflated value of, say, $10 or even $12 million, and the town will repay the buyer the tax from the total. So the town doesn’t actually get the extra cash: that pays the buyer’s taxes. Did I mention the shell game?

Then there’s the “break fee” or termination fee we will pay even if the deal falls through. This happened to Innisfil when its council decided not to sell InnPower to EPCOR (as I recall from media stories, the amount was $1.2 million, but I may be incorrect). Wikipedia tells us this is:

… a penalty set in takeover agreements, to be paid if the target backs out of a deal (usually because it has decided instead to accept a more attractive offer). The breakup fee is ostensibly to compensate the original acquirer for the cost of the time and resources expended in negotiating the original agreement. A breakup fee also serves to inhibit competing bids, since such bids would have to cover the cost of the breakup fee as well.

Which my industry sources tell me has already been agreed upon – in secret of course – by The Block and the town administration. We’ll pay it even if we decide not to sell. How much will it cost us? It really depends on what sort of slimy deal The Block cut, but again my industry sources suggest it will be between 8% and 13% of the offer.

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The Block’s worst abuse of power yet

Abuse of powerI warned you. I warned you The Block would blame others for their own evil acts, that they would scheme and connive to sell your assets behind closed doors, and they would find a way to keep the much-disliked interim CAO on, no matter what the cost to taxpayers. I warned you they would lie, scheme in secret, and behave unethically in order to get their own way. 

And I was right. They did it all, Monday night, behind closed doors.

This week, the town issued a media release that can only be described as the most flagrantly disingenuous statement this municipality has ever made. It says:

In order to ensure the process carries on uninterrupted, Council voted to direct the municipality’s legal counsel at Borden Ladner Gervais LLP, and CAO John Brown to continue negotiations with EPCOR and prepare the required draft agreements.

The Block intend to keep paying the sole-sourced lawyer (who, I understand, has already billed the town around $500,000) and its unpopular interim CAO (whose salary is higher than that of the premier of Ontario!) in order to continue the vendetta against our publicly-owned utility, Collus-PowerStream.

These are the same people who not long ago promised they were only “kicking tires” and would get public input before they made any decisions. They lied.

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Betrayal by the Block, again

Betrayal of the public trustMonday night, The Block will engage in their favourite political activity: betraying the public trust. In fact, it’s the only political activity they’ve engaged in this term, in which the public has been concerned. Everything else they’ve done has been to further their own personal agendas or entitlement. But Monday, they’re doing it up in style. And, of course, in secret.

At the council meeting, Monday, there is what promises to be a lengthy in-camera session:

Items for Discussion: a) Hydro Share Sale; b) Committee/Board Applications; c) Sale of 70 Huron Street property; d) Proposed Land Acquisition; e) Airport Lands f) BMA Report

During this closed-door session, council will get a presentation from its sole-sourced, $700-an-hour lawyer, and from the for-profit, out-of-province corporation EPCOR, with which the town is negotiating to buy the public’s share of our electrical utility. And I expect The Block will vote to sell the utility to EPCOR, knowing full well it will end any pretense of accountability with the utility and will result in skyrocketing electrical bills in the very near future. EPCOR will have a clause in its contract GUARANTEEING them a profit. And if you conserve electricity as you should, and the usage goes down, they will be able to raise rates to get their money and the town will be forced to pay the difference (via your tax dollars). All done behind closed doors.

The Block have never discussed in public why they want to sell the utility, what the town will get for it, what the benefits are to the residents, why they chose EPCOR instead of our partner PowerStream, or whether local people will still continue to have jobs after the sale. Nor do we know whether any of them, any staff members, or any of the sole-sourced lawyers and consultants involved will get a commission or any other kickback from the sale. The Block have never once reached out to the council of the 4,000-plus Collus-PowerStream customers outside Collingwood, to even inform them of the sale.

We, the public, deserve to know. It’s OUR utility. But The Block don’t give a damn about what we think. They’ve proven that over and over and over.

Compare Collingwood’s secretive, highly deceptive and unethical process with that of Wasaga Beach. The Beach council recently decided to investigate selling its electrical utility and went through a lengthy process of open public meetings, online surveys, public engagement and presentations. But then, Wasaga Beach has an ethical council – that’s the difference. Not once in the past two-and-a-half years has this council done any of that. And the local media, in collusion with The Block, have remained silent on this abuse of power.
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What will the secret EPCOR negotiations cost us?

Shady dealsI was reading about the failed attempt by EPCOR – an Edmonton-based, for-profit corporation – to purchase half of Innisfil’s Power utility (InnPower) last year. Back in Sept., 2015, there was a story in the
Barrie Examiner that noted:

INNISFIL — Town council has approved the sale of 50% of InnPower (formerly Innisfil Hydro) to Edmonton-based EPCOR to create a new ‘strategic partnership’.

At a public meeting to discuss the sale (remember public meetings and public engagement? Those are processes you got last term… this term it’s all about secrecy), PowerStream’s CEO, Brian Bentz commented on

…the “exclusivity clause” in the EPCOR offer, which precludes consideration of other deals for a period of six months…

EPCOR, you may recall, is currently trying to buy the town’s half of Collus-PowerStream. The administration has been negotiating behind closed doors with EPCOR for the better part of a year. Earlier this year, the administration signed a deal to start the buying process. Is there a similar clause in the agreement with Collingwood?

In Innisfil, the public was given a chance to openly comment on the proposal (an event unlikely to happen here in Secretive Collingwood under The Block). Former Innisfil mayor Barb Baguley spoke out about the process (Barrie Examiner):

During the open forum portion of Tuesday night’s meeting, former Innisfil mayor Barb Baguley took exception to the town even considering such a partnership for water and wastewater services and questioned why residents weren’t better informed about the potential partnership discussions.
“The issue of selling any part of it is something I’m really concerned about,” she said. “My question is, if you are going to sell the safety of water and the protection of Lake Simcoe with wastewater treatment, shouldn’t we be talking about that? Shouldn’t we be having a conversation with the public?
“I’m not sure if it’s good or bad. There’s not enough information for people to make a somewhat educated opinion,” she added. “It had not come out that clearly…”
“I don’t think we have to know every paragraph in a contract. We need to know the intention and why we need to do this,” she said. “I’m not saying I’m for or against (a water and wastewater services partnership). I’m saying I don’t understand.

At least the residents in Innisfil were given the opportunity to ask questions and make comments. Nothing like that has happened in Collingwood, although the discussions here have been going on behind closed doors since January 2015.

And look the whole public engagement Wasaga Beach has gone through over the sale of its utility this term: open, active and transparent. The complete opposite of what Collingwood has done.

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