Decisions about CUI

Background:

On September 4, 2018, City Council announced that they were taking action on CUI. After hearing overwhelming concerns from residents and having meetings with various representatives connected with CUI, including members of their Board, Council decided that the status quo is no longer desirable and are looking into alternative options for the future of CUI. 

Decisions and information about this process will be listed here. 


Latest Updates:

November 8: City Council narrows down options for CUI; CUI Board releases CEO

CUI Options

As announced this past summer, City Council has decided that the current governance and operations of CUI are no longer desirable, that the status quo is not an acceptable option and changes to the company are required.

“Finding a solution that puts the City and the company in a better position to serve residents in fiscally responsible ways is of the utmost importance to this Council,” says Mayor Marshall Chalmers.

Earlier today, the CUI Board of Directors announced that they have terminated the employment of CUI CEO Leigh-Anne Palter. The Board will also be announcing an interim CEO, who will serve as a short term contracted transition manager.

At their regular meeting on November 6, City Council narrowed down the options for the future of the company with a focus of bringing the operations of CUI back into the City’s management.

Originally presented with five possibilities by KPMG and McMillan LLP, Council has asked Administration to conduct detailed analysis into the cost and implications of bringing the company back into the municipality as a department (municipalization option) or retaining CUI solely for the purposes of holding existing debt separately from the municipality until the debt is retired (shell company option). Council also directed Administration to explore the continued outsourcing of services and the possibility of partnership with an existing utility.

“Reaching a decision for the future of CUI is top of mind for Council and we anticipate choosing a path forward before the end of the year,” says Chalmers. “While we will dig into every detail of the choices before us, we are working with the greatest urgency to find a better solution for our community.”

October 30:

CUI MeetingIn September, City Council resolved that the governance and operations of Chestermere Utilities Incorporated (CUI) require reform and that the status quo is no longer desirable. At a special meeting last week, Council received the eagerly awaited report from KPMG and McMillan LLP detailing reform options for the city-owned utility company.

“Residents voiced their concerns about CUI loudly and clearly, and we recognize that changes are necessary,” said Mayor Marshall Chalmers. “As we are dealing with millions of dollars in impact, we want to ensure we make the best decision possible for the future of the company. Therefore, we will be deliberate and thorough in our analysis of each of the options presented.”

The reports presented five different options for Council to consider:

  • Municipalization: CUI would be folded back into the municipality to operate as a municipal department.
  • Shell / Hybrid: 
  • Option A: CUI would retain its legal and financial status as a corporation, allowing it to hold existing CUI debt and to raise new debt, as required, separately from the municipality.
  • Option B: CUI would be retained as a shell to hold existing debt and to collect future offset levies related to existing assets. However, CUI would not be used to raise any new debt and would be wound up once all existing debt is retired.
  • Merger/Amalgamation: The municipality would amalgamate CUI with other municipal water utilities, where these are also in the form of corporate entities.
  • Partnerships/Outsourcing: CUI or the municipality would use outside suppliers and investors to provide services or facilities under contract or to jointly invest with CUI in new business ventures.
  • Enter into New Business Ventures: CUI or the municipality would enter into new lines of business that offer the potential to earn additional revenue and income.

A summary of these proposals with potential advantages and disadvantages of each is below under the October 22 listing.

Now that the options have been presented, Council will review the reports in detail and reconvene in November to choose a path forward. When available, details on that meeting will be announced.

October 22: 

Council will hear from KPMG and McMillan LLP about options for the future of CUI. 

Review the slides of the presentations here: 

The agenda is available at www.chestermere.ca/agendas.

September 28: Special Meeting Coming Up October 22Special Meeting Coming Up

As announced earlier this month, the results of the KPMG and McMillan LLP Report about options for the future of CUI will be presented at a special Council Meeting on October 22 at 5pm. Everyone is welcome to attend and the meeting will follow the standard meeting format. This always includes a public Question Period if residents wish to address Council. Watch for the agenda to be posted to www.chestermere.ca/agendas.  

September 21, 2018: Letter to CUI Stakeholders, Staff and Vendors

Dear Chestermere Utilities Incorporated Stakeholders, Staff and Vendors,CUI Office

It has been public knowledge for a number of years now that the residents of Chestermere have many questions and concerns about their City owned company, CUI. The current Council, elected in October 2017, received a clear message from Chestermere residents that they expected an in-depth review of the business as a whole and the new Council committed, through the City’s strategic plan, to conduct this review.

Since the election, the CUI Board and management have provided Council, through a series of meetings, with an in-depth analysis of CUI’s business, operational challenges and financial state of affairs. With this knowledge, Council and the CUI Board concluded that the status quo could not continue and on September 4, 2018, the City engaged the services of KPMG and McMillan LLP to conduct an independent review of the business and provide options for Council’s consideration, which will be presented at a Special Council Meeting on October 22, 2018. We invite you to attend.

We acknowledge that change and transition can be unsettling. We are committed to finding a path forward that will be outcome focused and respectful of all. While the work surrounding this matter progresses with a sense of urgency, we want to take the appropriate time following the report from KPMG and McMillan LLP, to carefully consider the options and chart the next steps forward.

We recognize that these decisions may affect you and want to keep you up to date along the way.

In the meantime, CUI will continue to deliver regular services without disruption.  We truly appreciate the service provided by the CUI stakeholders, staff and vendors and we ask you to continue to serve the citizens of Chestermere with pride, and to the best of your ability. To our CUI customers, thank you. We are committed to providing the best value we can in the delivery of these essential services. 

We ask for your patience while we work collaboratively, together as a community, to find the best way forward.

Sincerely, 

Mayor Marshall Chalmers & CUI Board Chair Lou Doiron

September 4: City Council looking into alternative options for CUI

Chestermere City Council 2017 web

Today Chestermere’s City Council took action on the future of CUI.  After hearing overwhelming concerns from residents and having meetings with various representatives connected with CUI, including members of their Board, Council decided that the status quo is no longer desirable.

Council decided that a change in the governance and operations of CUI is required and passed two key resolutions regarding CUI’s future.

“Future operational considerations for CUI was included in our Strategic Plan,” says Mayor Marshall Chalmers. “It’s important for Council to look into the financial future to combat the significant utility rate increases in past years.”

The decision to review CUI would result in retaining KPMG (the City’s auditors) and McMillan LLP (the City’s legal counsel) to provide recommendations for options on restructuring CUI.

The range of restructuring options considered for this joint engagement included:

  • Municipalization: CUI being rolled back into the municipality,
  • Hybrid: CUI would retain its existing structure, however the management and operation of the utility would be integrated back in the municipality,
  • Changes to Financial Policy: Changes in CUI’s approach to financing new investment and,
  • Partnerships/Outsourcing: CUI could partner with other utilities or municipal agencies to enhance performance or improve efficiency.

Some of these options may not be mutually exclusive and could be combined.

The expected cost of this report is $65,000 and funding will come from the Council Priority Restricted Surplus Account. The alternate options report will be submitted at a Special Meeting of Council on October 22, 2018.

“I have full confidence in KPMG and McMillan LLP’s ability to provide the restructuring options necessary to satisfy Council’s desire to move in a different direction,” says Bernie Morton, Chief Administrative Officer of the City of Chestermere.

To become better informed on CUI operations, City Council has appointed all members of Council to the CUI Board effective immediately.