Management of Sale Proceeds

When Council approved Hydro One’s proposal to purchase the shares of Haldimand County Utilities Inc. (HCUI), a fundamental provision was that the principal proceeds from the sale be preserved in perpetuity. Council subsequently approved a strategy that allowed the net sale proceeds of $72.4 million to be securely invested, yet generate significant income for future municipal use, while protecting the principal.

A formal policy (POLICY No. 2018-01 – Hydro Legacy Fund), and by-law (By-law No. 1909-18) governing the use of these funds was presented to and ratified by Council in March 2018. The policy & by-law govern the management, uses, controls, transparency and accountability measures related to this significant fund in order to protect it for the perpetual benefit of Haldimand County taxpayers.

The passing of By-Law No. 1909-18 ensures that if a Council wishes to consider an amendment to, or an override of, any provision of the By-law or the related Hydro Legacy Fund Policy, such decision can only be considered at a Public Meeting, open to input from the public without the requirement of registering as a Delegation, and with Public Notice given a minimum of four weeks in advance of such meeting, including details of the proposed motion to be voted on.

Uses of Hydro Legacy Fund’s Investment Earnings

The investment earning potential of the Hydro Legacy Fund is expected to provide a major source of revenue to finance future County initiatives. POLICY No. 2018-01 – Hydro Legacy Fund outlines four types of permissible uses of Hydro Legacy Fund investment earnings, in priority order:

1. Annual inflationary indexing of the principal net sale proceeds
2. Contributions towards major assets/infrastructure that benefit Haldimand County
3. Annual contributions to reduce the operating tax levy, not to exceed the current contribution of $300,000 approved in 2017
4. Financing strategic economic initiatives/opportunities that are anticipated to have County-wide benefits through enhancements to local employment opportunities and Haldimand’s assessment base

Hydro Legacy Fund – News Releases (as they become available)

Background Information: Sale of Haldimand County Hydro

In 2012, Haldimand County Council passed a motion to examine options for the future of the publically owned Haldimand County Utilities Inc., while recognizing the importance of providing affordable, reliable and sustainable electricity distribution services to its ratepayers. Council’s motion was in response to a Sector Panel Review established by the Ontario Ministry of Energy, which recommended consolidation of Local Distribution Companies (LDCs) to encourage efficiency and cost savings with regards to the distribution of electricity.

In December 2013, the County received an unsolicited share purchase proposal from Hydro One. Following months of expert review, negotiations and community input, Council approved the Share Purchase Agreement at its Council meeting of June 10, 2014. With the subsequent approval of the Ontario Energy Board and extensive divestiture processes, the sale closed on June 30, 2015 upon the County’s receipt of $72.4 million in net sale proceeds. This represented a gain on sale of $34 million or 87% above the book value of the HCUI shares owned by Haldimand County.

Background documents related to the sale of Haldimand County Hydro