Meeting next week, city council will consider a motion aimed at getting Greater Sudbury Utilities to begin paying the city dividends.
The motion is a result of an audit of the city-owned corporation by Auditor General Ron Foster. Among his findings was that the GSU's shareholder declaration – one of the documents that sets out how the GSU must operate – requires the utility to set a dividends policy.
That hasn't happened, Foster's audit found, largely because the GSU gives discounts to the city when it buys services.
“A dividends policy has not been established, but the board has adopted the position that in lieu of payment of dividends, any service provided to the city will be provided at cost or at a significant discount from market rates,” the audit said.
A dividend policy would see Greater Sudbury receive a share of the GSU's next income. The utility's net income was about $2 million in both 2015 and 2016, rising to almost $3.3 million in 2017.
Foster's audit recommended the GSU establish a policy to pay dividends to the city. In response, the GSU board said it was working on an estimate how much the city saves through GSU discounts.
“At our last shareholder’s meeting, council asked that we provide some analysis of the value that GSU provided the shareholder, a well as discuss a potential dividend framework,” the audit said, quoting GSU management's response. “The board will continue this work and report back to the shareholder as soon as practicable.”
The motion on the Dec. 11 city council agenda calls for a deadline for the dividend policy to come into effect. It also calls for the city's finance department request financial and other information from the GSU's operations from the last five years.
It also directs the city's manager of corporate services to change the GSU's shareholder declaration to provide to the city an annual report on unconsolidated financial statements, business plans, operational reviews and dividends.
The motion sets a June 2019 deadline to establish the new policy, and for the GSU to pay the city 50 per cent of its 2018 net income, or $1 million, to be paid by Sept. 30, 2019.
