Orillia Power dividend numbers released
PATRICK BALES/THE PACKET & TIMES Orillia Power Distribution Corporation.
Orillia Power generated another $1.1 million for the City of Orillia in 2016.
That's the dividend the locally-owned utility will be supplying the city after a year where revenues and operating costs both rose.
The "successful but challenging" year in the eyes of Orillia Power Corporation board chair Greg Gee saw revenues increase to $55.1 million, up from $51.9 million in 2015. But operating costs rose at a greater rate, up $4.8 million from 2015, to $55.1 million.
The bulk of that increase came from that amount of money Orillia Power had to pay to provincial agencies for its customers' electricity. Nearly 80% of the operating costs in 2016 were tied up in the cost of electricity, accounting for all but $500,000 of the increase in operating costs last year.
Net earnings, after interest and payments in lieu of taxes, were $2.7 million in 2016, down from $2.8 million in 2015. Return on equity was 10% as opposed to 11.1%.
One of the reasons for the decline in earnings is a weaker generation year than anticipated, explained Mayor Steve Clarke.
"2016 started off to be a great generation year, where the bulk of the money is earned by OPC," he said. "The generation side, last year, started off gangbusters. From January through to May, the amount of rain kept the water flowing through the hydro dams at a great rate. Unfortunately, after May, the lack of rain created some issues for generation."
The mayor was still pleased with what Orillia Power was able to accomplish with its generation in 2016.
"Even despite that challenge, they were able to generate a bottom line close to what they did the previous year," he added.
While water generation was hindered by drought-like conditions in central Ontario last year, the company's solar operations continued to line the coffers of the utility. While solar accounts for only 2% of generation, it created 11% of the revenue, thanks to "attractive 20-year contracts," Gee told councillors.
Last year was one of the biggest years for capital investments in Orillia Power's history as well. The company's total assets rose by more than 26%, thanks to more than $14 million in capital spending. On average, Orillia Power spends around $5 million on capital projects annually.
With the deal with Hydro One nearing completion, 2016 may be the last year the city receives a seven-figure dividend for the foreseeable future. But the mayor stressed the bulk of the dividend is from the generation side of the company, which is why it was never for sale and will remain owned by the city.
Clarke also remains confident the money lost when the distribution arm is sold to Hydro One will be made up in other ways.
"The $36 million we're going to put into an investment account will create a significant amount of money," he said. "We believe that should more than make up for any decrease in the dividend. The number with the dividend from the generation and the dividend from the interest that the investment makes, we believe, may be more than we are receiving right now."