This newspaper can’t conclusively say whether selling Pelham’s shares in Niagara Peninsula Energy Inc. was a good move to attempt. We haven’t seen the professional analysis, which remains part of the Town’s closed session records. That said, we do know that hydro companies are seen as stable investments, and we do know that in 2015 Haldimand County sold their hydro company to Hydro One for $75 million dollars. We also know that in the same year the City of Woodstock sold their hydro company to Hydro One for $46.2 million dollars, and that closer to home, we know that Thorold’s sale of their hydro company, also to Hydro One, has resulted in the City of Thorold being debt-free—a stark contrast to Pelham’s all too well-known currently cash-strapped condition.
The Town’s annual financial statements indicate that Pelham’s shares of the utility are worth in excess of $5 million dollars. The staff report says that the annual rate of return, paid by way of dividends, fluctuates, but is typically in the ballpark of 1 percent, which we also know is not an attractive return by any stretch of the imagination. By one calculation, it would take over 100 years for the Town to earn in dividends what it would have banked by simply selling its shares—which is presumably why council was so eager to pursue a deal.
Selling part of a hydro company is complicated, and in this case the other municipalities with ownership stakes (Lincoln, West Lincoln and Niagara Falls) have right of first refusal before our shares could hit the open market. Government permission is also needed for sale of shares in a municipally owned hydro company, unlike stock in, say, Canadian Tire or CIBC, and so a whole legal process is required to sell, which means legal advice, which means legal bills.
What is clear from the debate at last Monday’s council meeting is that council’s usual partisan divide yet again reared its head, although this time the Gang of Four didn’t have voting control, due to the absence of both Councillors Haun and Hildebrandt, who were forced to declare conflicts of interest (they get paid for sitting on the holding company board that controls the utility).
The staff report, written by the CAO and Treasurer, indicates that $68,000 of Town money was spent on consultants and legal advice to investigate the potential sale. When it came time for council discussion, things got a little testy. Councillor Kore insisted that “receipts” be provided for the legal and consulting services, even though these costs were already reported, and even though he had been privy to these details behind closed doors. Why “receipts” would be necessary, when they are not provided for any other spending (that’s what the annual independent audit is for) is unclear—except, of course, as an opportunity for cheap, pearl-clutching grandstanding. For her part, Councillor Haun became highly insistent the staff report be rewritten to identify that she had a conflict of interest. When staff explained that conflicts of interest are not the stuff of staff reports, things went from petty to petulant, with Haun insulting the CAO for what appeared to be his reasonable effort to maintain the neutrality of corporate reports. How dare he act professionally!
This paper has occasionally expressed disappointment with certain decisions made by Councillor Hildebrandt, so on this occasion we’re happy to give him his due. Rather than enter the fray in a partisan manner, he took the high road and spoke, eloquently, about the benefits of keeping the shares and the reasons that he thinks they will ultimately appreciate in value—and possibly also increase their future dividend payments. He should be recognized for focusing on the community's interest, rather than trying to score catty political points at the expense of logic and civility.
It’s hard to say whether selling the shares would have been preferable to the ultimate decision to keep them. What can be said though, is that it costs money to make money, and clearly this process required some outside expertise, something that a majority of council was obviously on board with a few month ago. Last Monday’s efforts to try to politicize a fact-finding and exploratory process remind this paper of the unfortunate right-wing attempts to politicize Covid-19 vaccinations. We all suffer when technically neutral items become political fodder, particularly fodder in the hands of bungling bush-leaguers and the peevishly sulky.
Pelham Town staff, and we taxpayers, deserve better. ◆
