In a move that’s hardly shocking, Innisifl council has decided to hang onto its utilities, including InnPower.
The move came at a recent Innisfil council meeting, where the town’s utility review was received and direction was given to not pursue the sale or wind-down of InnPower, InnServices or InnTerprises.
“Our consultants presented a whole range of possible options for council to consider,” town chief administrative officer Oliver Jerschow told councillors at the May 8 meeting. “Tonight’s report is intended to take a number of those options off the table.”
However, changes may be coming to the composition of those organizations and their board structures, including a potential merger into a single corporate entity.
“It’s been clear to me, over the past year, that there’s interest in exploring alternative corporate structures,” Jerschow said. “So, rather than having three different companies with three distinct boards, are there benefits from have a more integrated corporate structure.”
What that could look like was not decided May 8, nor will it be decided at the 2024 utility annual general meeting (AGM), scheduled for June 26. Rather, staff was directed to research the pros and cons of merging the three entities, as well do a more detailed review of the structure, composition and mandate of their boards, and report back to council before the end of the year.
Any changes directed by council could then be enacted in time for the 2025 AGM.
Earlier this year, councillors heard from Ernst & Young, the consulting firm tasked with reviewing the composition of the town’s utilities and offering recommendations for their future state.
That report suggested “the town may consider the sale of all (i.e., 100%) or a percentage share of InnPower to another utility company or investor,” which could “reduce the overhead associated with owning and managing a utility, as well as provide an opportunity to further de-risk investments.”
The report also suggested InnTerprises could be sold off or dissolved “as the entity has moved to a position of loss,” and “it may no longer be sustainable to continue operating the entity within the current state of operations,” while InnServices could be reabsorbed as a town department.
Council doesn’t have the appetite to move in that direction, staff indicated.
“(Ernst & Young) identified several ‘transformational’ options in their report,” the staff report indicated. “To date, council has not expressed interest in any of these options, and therefore this report recommends that these options be formally rejected at this time and not given further consideration."
That aligns with the messaging from Danny Persaud, president and chief executive officer of InnPower, InnServices and InnTerprises, who in February called any sale consideration shortsighted and a detriment over the long-term.
The financial benefits of a sale were not fully investigated by staff as part of this report, but were acknowledged to be potentially significant.
“Adopting this recommendation means that council would be choosing not to reap the financial benefits that a sale of the town’s interest could entail, and further that council accepts some of the operational challenges that having a separate company for water and wastewater services entails,” the staff report stated.
The resolution contained additional direction on increased operational independence for the utilities, updated shareholder direction from the town and other future growth provisions, including exploratory discussions with other municipalities in southern Simcoe County on cross-border services.
“One of the goals of the utility review has been to create an opportunity for the current council ... to set its direction as sole shareholder for the three utility companies,” the report stated. “The utility companies will all be able to perform their best if they can have confidence that they understand the shareholder’s expectations, and that those expectations are not going to be subject to ongoing change.”
