Woodstock Hydro..In Bill Downings’ Words

SHOULD THIS BE LOOKED AT BY SOMEONE SIMILAR TO THE AUDITOR GENERAL…OR MAYBE A FORENSIC AUDITOR?
The Woodstock Public Utility Commission operated Woodstock’s hydroelectric distribution system until the year 2000. In July of that year, the hydroelectric distribution system was taken over by a newly formed company Woodstock Hydro Services Inc.

The former utility was wholly owned by the City of Woodstock. The new hydro services corporation is likewise wholly owned by the City.

With the change in organization of Woodstock’s hydro distribution system in 2000, opportunity was presented for the city to refinance the utility and take out $10.9 million in cash. That money could have been used for any municipal purpose as decided by the city council.

The refinancing of the hydro utility was to have been accomplished by borrowing the $10.9 million from a bank or other lending institution and paying that money over to the city. The sources for the utility to borrow that much outside capital-debt in year 2000 did not exist. The City therefore decided that the utility would give the city an “accommodating” promissory note and pay interest to the city until the money market changed.

The City of Woodstock did not ever loan the Woodstock hydro utility any money. The interim arrangement simply provided a means for the utility to legally pay an annual amount to the city until such time as the utility was able to refinance.

According to the recent announcement reported by the Sentinel Review, the hydro utility has now been able to borrow $10.9 million dollars from a “private-sector bank”. That money in turn, has reportedly been turned over to the City.

The result of the transactions is that the utility has taken on a $10.9 million debt obligation. The hydro utility is wholly owned by the City of Woodstock. Consequently, the city has itself effectively borrowed the $10.9 million dollars on the credit of the utility. Presumably, all of the funds required for the annual interest payments and the repayment of the $10.9 bank loan will be charged to and paid by Woodstock Hydro’s rate paying customers.

The hydro utility has changed its capitalization to about 50% share capital and 50% debt. The city still owns the utility. That was the city’s original objective as set back in year 2000 when the hydro system was first reorganized. In the meantime, the utility has paid the city 6.756% interest each year on the accommodating $10.9 million note. The funds having been collected from Woodstock hydro rates and used for city purposes.

The Utility’s value has been reduced by $10.9 million.

As submitted by Bill Downing
(Here is the material . You may use it as you wish. I have much more information which has not been made public which, for the time being at least, I am unwilling to publish.)
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9 Comments

  1. Anonymous
    Posted January 1, 2009 at 10:42 am | Permalink

    I seem to recall our Mayor as characterizing this 10.9 million as a financial windfall some time ago in the local paper. Unfortunately I can’t verify that since the Sentinel has chosen to cripple the archive function of their new and improved website.

    If this bank loan was misrepresented in a public statement by anyone covered by the Integrity protocols then a complaint should be lodged with the Integrity Commissioner.

  2. Anonymous
    Posted January 1, 2009 at 11:54 am | Permalink

    What a lovely scam. City Council is publicly patting itself on the back for battling to keep property taxes down while privately borrowing millions that we will have to repay on our hydro bills.

    Will there be a line on our hydro bills so we can see what portion of the charges are dedicated to repaying the money Council borrowed? What are they planning to do with this money? If Council is going to borrow 10.9 million dollars they should be prepared to explain a pressing need to assume the debt, especially in a time of economic recession.

    Why do we need to borrow 10.9 million dollars?

    How much is that new art gallery supposed to cost again?

  3. Anonymous
    Posted January 1, 2009 at 3:30 pm | Permalink

    This is the ramblings of a confused writer and should be seen as such. The only thing he got right was his name.

  4. Anonymous
    Posted January 1, 2009 at 4:16 pm | Permalink

    “This is the ramblings of a confused writer and should be seen as such. The only thing he got right was his name.”

    If what you say was even remotely true you would have pointed out the errors in Mr Downing’s letter. You didn’t. You didn’t because you can’t.

    Mr Downing’s competency and credibility are not at question. Yours are.

    Tell us where Bill strayed from the truth in his letter. Back it up, or piss off and stop maligning the character of your betters.

  5. Anonymous
    Posted January 2, 2009 at 10:58 am | Permalink

    He doesn’t sound very confused to me.
    Wasn’t he the guy in charge of the PUC and hydro holdings in Woodstock at one point?

  6. Anonymous
    Posted January 2, 2009 at 11:28 am | Permalink

    “Wasn’t he the guy in charge of the PUC and hydro holdings in Woodstock at one point?”

    Yes he was. He is also a past Mayor of Woodstock. He was “encouraged” to leave his position with Hydro some years ago. Considering what he has to say in his letter it doesn’t take a great deal of imagination to see why he didn’t fit in with the current bunch.

  7. Anonymous
    Posted January 3, 2009 at 9:36 am | Permalink

    I managed to find the news release from Oct 17. The story is essentially factual but the spin put on it by the Sentinel makes this little financial sleight of hand trick sound like a good thing. The story makes it sound like Woodstock won the lottery. The true nature of the deal, the fact that Woodstock has borrowed 10.9 million dollars from a bank for no disclosed reason, was carefully glossed over.

    According to the story Council is going to be presented with a list of possible ways to spend the money. Got that? They will be presented with a LIST of possible ways to squander the money that we will be paying back on our hydro bills. Does that sound like there was any real need to borrow the money? You can bet the art gallery will be on that list.

    These people are borrowing money that we will have to pay back and they don’t even know what to do with it! They have to be provided with a LIST to figure out how to spend it!

    This is your elected civic government in action. Be proud Woodstock.

    …..and if you voted for any of these bastards do the rest of us a favour and stay home on voting day next time.

  8. Anonymous
    Posted January 4, 2009 at 12:09 pm | Permalink

    anyone know about council bonueses being paid?

  9. Anonymous
    Posted January 4, 2009 at 12:56 pm | Permalink

    My understanding is that councillors do not get a bonus in the sense of a performance bonus. That would just be a cruel joke on the taxpayers. Any council bonus based on performance would have to be in the form of a pay cut.

    They get an annual payment in lieu of pension and benefits. I don’t know if the precise amount is disclosed but it should be as it is part of their total wage package.


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