The Shareholder of Hydro Ottawa Holding Inc./
L’Actionnaire de la Société de
Portefeuille Hydro Ottawa Inc.
25 June 2008 / le 25 juin 2008
Submitted by/Soumis par : Pierre Richard, Chair,
Hydro Ottawa Holding Inc. / Président du Conseil d’administration de la Société de Portefeuille Hydro Ottawa Inc.
and
/ et
Contact Person/Personne ressource : Rosemarie T. Leclair, President and Chief Executive
Officer, Hydro Ottawa Holding Inc. / Présidente et chef de la direction de la
société de portefeuille Hydro Ottawa Inc.
(613)
738-5499 x 203, RosemarieLeclair@hydroottawa.com
SUBJECT:
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OBJET :
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RAPPORT ANNUEL DE 2007 DE L’ACTIONNAIRE DE LA
SOCIÉTÉ DE PORTEFEUILLE HYDRO OTTAWA INC. |
That Council:
1. Receive the Audited Consolidated Financial Statements of Hydro Ottawa Holding Inc. for the Year 2007 as set out in the Annual Report at Document 1 (issued separately and held on file with the City Clerk);
2.
Appoint Ernst & Young LLP as the auditor of Hydro
Ottawa Holding Inc. for the Year 2008;
4.
Authorize the Mayor and the City Clerk to sign a
written resolution on behalf of the City of Ottawa as shareholder of Hydro
Ottawa Holding Inc. setting out the resolutions approved by the City Council.
Que le Conseil :
1. Reçoive les états financiers consolidés vérifiés de la Société de portefeuille d'Hydro Ottawa inc. pour l'année 2007 tels que présentés dans le Rapport Annuel ci-joint au Document 1 (distribué séparément et tenu sur dossier par le greffier de la Ville) ;
2. Approuve que la société à responsabilité limitée Ernst and Young soit désignée vérificatrice de la Société de portefeuille Hydro Ottawa Inc. pour l’année 2008 ;
3.
Renouvelle
le mandat des personnes dont il est question dans le document n° 2 pour
qu’elles puissent faire fonction de membre des conseils d’administration de la
Société de portefeuille d’Hydro Ottawa Inc. et d’Hydro Ottawa Limitée pour le
mandat correspondant précisé ;et
4. Approuve que le maire et le greffier municipal soient autorisés à signer, au nom de la Ville d’Ottawa à titre d’actionnaire de la Société de portefeuille Hydro Ottawa Inc., une résolution écrite énonçant les résolutions approuvées par le Conseil municipal.
Hydro Ottawa was created in November 2000 following the amalgamation of the municipalities of the former Region of Ottawa-Carleton and the restructuring of the Ontario electricity sector as a result of the Electricity Act, 1998, which required all hydro utilities to operate as business corporations. Under this new structure, Hydro Ottawa Holding Inc. is a for-profit company that continues to be wholly owned by the City of Ottawa, and is governed by an independent Board of Directors appointed by its shareholder.
Under the
Ontario Business Corporations Act (“the Act”) and the terms of the
Shareholder Declaration issued by the City of Ottawa, Hydro Ottawa Holding Inc.
(“the corporation”) is required to place before its shareholder, the City of
Ottawa, annual financial statements relating to the corporation. This
requirement may be met by either holding an Annual General Meeting (AGM) of the
shareholder or by the shareholder’s written resolution to receive the financial
statements.
The 2007 audited financial statements consolidate financial information relating to Hydro Ottawa Holding Inc. and its subsidiaries, Hydro Ottawa Limited, Energy Ottawa Inc. and Telecom Ottawa Holding Inc. These financial statements were approved by the Board of Directors of Hydro Ottawa Holding Inc. at its meeting on April 10, 2008. Ernst and Young (E&Y), the corporation’s independent, external auditors, have provided an unqualified opinion on the corporation’s statements. E&Y’s opinion states that the financial statements present fairly, in all material respects, the financial position of the company at December 31, 2007 and the results of its income, comprehensive income, and its cash flows for the period then ended in accordance with generally accepted accounting principles.
In 2007, the Hydro Ottawa Group of Companies (Hydro Ottawa or the
corporation) continued its trend of solid financial and operational
performance. Consolidated net income
for the year was $27.291 million, enabling the corporation to pay a dividend of
$16.375 million to its shareholder in April 2008, exceeding forecasts by more
than $2 million. All three operating
divisions exceeded their financial targets in 2007, and each made a positive
contribution to net income.
These results continue a trend of strong financial performance over the
past several years. Over the past three
years, Hydro Ottawa has paid $40 million to the City in dividends, and has
increased its shareholder value by nearly $50 million. This achievement reflects a determined
effort to increase the company’s financial strength, continually enhance its
operational efficiency and effectiveness, position the company for future
growth, and increase its long-term value.
Hydro Ottawa’s quarterly credit rating with Standard & Poors (S&P) remained at A-, while the Dominion Bond Rating Service (DBRS) annual rating remained at A (low). Both agencies revised the trend on Hydro Ottawa’s credit rating from stable to positive during the course of 2007, reflecting both a greater degree of confidence in the regulation of the sector as a whole and continuing improvement in Hydro Ottawa’s financial metrics driven by strong operational performance and the company’s relatively low risk profile.
Details on the financial results
and business achievements of the Hydro Ottawa Group of Companies in 2007 are
documented in the corporation’s Annual Report, which has been issued separately
and is held on file with the City Clerk as Document 1 to this submission.
Recommendation 2
Auditor
Selection
Pursuant to the
Ontario Business Corporations Act, the shareholder is also required to
appoint an auditor for the corporation.
In 2007, Hydro Ottawa Holding issued a request for proposals (RFP) for
external audit services for a three-year term commencing with the 2007 year-end
audit. Ernst & Young was selected
by the Board of Hydro Ottawa Holding Inc. on the basis of the three-year
proposal. Last year, the City of Ottawa
approved the appointment of Ernst & Young LLP as auditors for Hydro Ottawa
Holding Inc. for the year 2007.
Council is now being requested to approve the second year of the
three-year term for Ernst & Young LLP as auditors for Hydro Ottawa Holding
Inc. for the year 2008.
Recommendation 3
The Shareholder Declaration for Hydro Ottawa Holding Inc. approved by City Council requires that members of the Board of Directors for Hydro Ottawa Holding Inc. and its wholly-owned subsidiaries (including Hydro Ottawa Limited) be appointed by the City of Ottawa. On June 27, 2006, following the restructuring of the Hydro Ottawa Board of Directors to comply with the Affiliate Relationships Code for Electricity Distributors and Transmitters issued by the Ontario Energy Board, City Council appointed a number of directors for terms ranging from two to four years. Profiles of these directors were previously presented to Council on June 27, 2008 and are on file with the City Clerk.
The terms of three directors of Hydro Ottawa Holding Inc. and one director of Hydro Ottawa Limited are expiring on June 30, 2008. All of these members have served effectively on the boards of directors and have contributed to the continued success of these companies. These directors have expressed an interest in continuing on the boards of directors for another three-year term with the exception of one director who has expressed an interest in a one-year term. The Chair of the Board, in consultation with the members of the Nominating Committee of Hydro Ottawa Holding Inc. (the Mayor, the two elected City Council members of the Board, and the President and Chief Executive Officer), is recommending to Council that these members be re-appointed for the terms set out at Document 2.
To satisfy the
requirements of the Ontario Business Corporation’s Act and the terms of
the Shareholder Declaration issued by the City of Ottawa, where an annual
general meeting of the shareholder is not held, a written, signed resolution of the shareholder is necessary to approve
all matters required to be dealt with at the annual general meeting.
Document 1 – 2007 Annual Report (including Audited Consolidated Financial Statements) of Hydro Ottawa Holding Inc. – Issued separately and held on file with the City Clerk
Document 2 – Recommended Re-appointments to the Boards of Hydro Ottawa Holding Inc. and Hydro Ottawa Limited
Document 1
2007 Annual Report
(including Audited Consolidated Financial Statements)
of Hydro Ottawa
Holding Inc.
Issued separately and held on file with the City Clerk
Document 2
Recommended
Re-appointments to the Boards of
Hydro Ottawa
Holding Inc. and Hydro Ottawa Limited
Name
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Board |
Term |
Effective Date |
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Patrick Dion |
Hydro Ottawa Holding Inc. |
3 years |
July 1, 2008 |
|
Ford Ralph |
Hydro Ottawa Holding Inc. |
3 years |
July 1, 2008 |
|
Ken Wigglesworth |
Hydro Ottawa Holding Inc. |
1 year |
July 1, 2008 |
|
Hydro Ottawa Limited |
3 years |
July 1, 2008 |