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:

April 2, 2019: Transition Plan Q&A

At the April 2, 2019 Meeting of Council, the CUI Transition Manager presented an update of the progress made to date on transitioning CUI. Below are some frequently asked questions about this process. If you would like more information on this work or have any questions, please contact the City at info@chestermere.ca

What is happening with CUI?

This past October, City Council asked for a report on what could be done with CUI. Five options were presented, and Council asked that Administration explore three in more detail: municipalization, keeping CUI as a shell company, and partnership opportunities.

This exploration was to proceed with the intent to transition CUI and provide utility services at better rates for Chestermere residents.The information below indicates what progress has been made to date.

What has the progress been on transitioning CUI?CUI TimelineFinal

A quick summary is in the timeline to the right. Check out a more detailed list of actions on CUI is below on this page.

Why is it taking this much time to transition CUI?

CUI is a multimillion-dollar company with extensive assets, contracts, staff, infrastructure, operations, and financial obligations. Decisions need to be made on what to do with every level of the company from the building itself to rewriting contracts. Transitioning the company is complex and City Council wants to be sure it’s done right and that decisions don’t end up costing citizens more in the long run. However, the plan is for CUI to be substantially disassembled by the end of this year.

Can the City just take over the contract between CUI and EPCOR (the current provider)?

The current contracts with EPCOR are all between CUI and EPCOR and changing them is part of the renegotiations underway between all parties. In addition, it is important for the City to examine all options for insourcing or outsourcing services to ensure that Chestermere residents get the best value for costs. Further, negotiations around other components of providing services (meter readings, maintenance, billings, customer service inquiries, etc.) need to be completed to determine whether they should be included in the contract.

Can the City simply absorb CUI and its debt?

The Municipal Government Act and its regulations play a big role in helping to determine how we can dissolve the company and how we manage their debt. As a municipality we have a maximum borrowing limit of 1.5 times our annual revenues as prescribed by law. 

Prior to September, CUI was operating on a business model that would continue to incur more debt. If the company was to continue operating in this way, combining the City’s debt and CUI’s debt puts us over that legislated limit and we need the Province’s approval to do that. In addition, if the City was to take on CUI’s debt, it would hinder the City’s ability to pursue other municipal projects. As well, the City is in discussion with the Province regarding debt limits.

City Council has directed the company to stop operating with the former business model of pursuing new projects. Instead, the City is looking into having future projects built by the development community which would lower the debt the City would need to absorb.

Under Council direction the City continues to explore other alternatives for the future of CUI. This exploration will assist with their decision about if or what, when and how the City will absorb some of CUI’s debt.

Will CUI exist by the end of 2019?

The plan is for all services currently provided by CUI to be outsourced or reorganized by the end of 2019. The company as it currently stands will no longer exist. The City may need to retain the ‘shell’ of the company for legal and financial considerations but the plan is that it will no longer provide services to the public by the end of 2019.

What will happen to all the CUI staff and assets?

Some of the current staff at CUI may become municipal employees if the City requires their expertise to help oversee the delivery of utility services. The other staff will be provided with a fair conclusion to their employment. CUI’s assets will either be transferred to the City or disposed of.  

How will these changes affect me? 

City Council recognizes that residents are frustrated with high utility bills and service delivery. The intention of this work is to find ways to reduce utility bills in Chestermere. There is also a goal to provide long-term utility rate stability so residents don’t experience any more extreme changes to their utility bills.

What about the projects CUI currently has underway? What will happen to them?

City staff will evaluate all projects CUI currently has underway including infrastructure upgrades. The City will determine whether or not projects should continue, be put on hold or outsourced to ensure residents receive the best value for their dollars. 

What will happen to the services CUI currently provides?

Below is a simplified version of the plan for CUI’s services:

Service

Current Structure

Proposed Future Structure

Water

CUI fields complaints and concerns about water services and coordinates connections. CUI manages the contract with EPCOR (the service provider).

Enhanced partnership with EPCOR being pursued or service may be in-sourced.

Wastewater

CUI fields complaints and concerns about wastewater services and coordinates connections. CUI also looks after coordinating any maintenance or upgrades to lift stations (that pump sewage back to Calgary for treatment). CUI manages the contract with EPCOR (the service provider).

Enhanced partnership with EPCOR being pursued or service may be in-sourced.

Stormwater

CUI looks after ensuring the storm drains are properly collecting stormwater runoff and ensures that storm ponds are working properly. They also manage projects to improve stormwater management and plan for future stormwater collection in new developments.

Enhanced partnership with EPCOR being pursued or service may be in-sourced.

Curbside Garbage, Recycling, Organics Pickup

 

CUI provides waste collection services for garbage, recycling and organics.

A RFP has been issued to explore outsourcing to a 3rd party or service may be in-sourced.

Recycle Depot

CUI provides staff to oversee and manage the recycle depot, remove items when full, and assist residents with questions.

The City will be taking over operation and management of the recycling depot.

Infrastructure Management

CUI manages large scale utility projects that include upgrading old utility lines, making improvements to storm pond structures, helping review utility plans for new developments and ensuring lift stations are operational.

The City will be assuming responsibility for all engineering support functions associated with CUI.

Utility Billing & Customer Service

CUI currently issues bills for water, wastewater, stormwater and curbside collection services. They also have staff to answer questions about bills and assist new residents in getting connected to utility services.

The City is exploring opportunities for alternate service delivery.



March 12: Mayor's Message on CUIprogress on cui

Over the last few weeks, I’ve received some emails and calls from residents wondering what is going on with Chestermere Utilities Inc (CUI).

Dismantling a multi-million dollar company, without cutting the services to our residents, takes time and we want to get it right.

If you’re interested in how we have been progressing, I invite you to take a look through the timeline to the right. In addition to these steps, we have also been thoroughly reviewing CUI’s operations, rate structure, assets, existing contracts, projects and accounting structure.  

At the moment, I am pleased to announce that Council has decided to move forward on issuing a Request for Proposal for outsourcing of waste collection and processing services for all three waste streams (garbage, organics and recycling).

As announced in January, we explored our other options and outsourcing of these services looks to be our best path forward to provide a stable service at a reasonable cost. We are still exploring our options for the other services CUI provides, and hope to make progress on those in the coming weeks.  

Thank you for your patience as we work to sort this out. Our focus right now is CUI and this Council is committed to trying to find the best path forward to deliver services to Chestermere in a long term, stable fashion.

If you have any questions, I encourage you to reach out and ask. Updates are posted to www.chestermere.ca/cui and we are very happy to talk with anyone who has concerns and would like to ensure you get all the facts.

Sincerely,

Mayor Chalmers





March 11: City and CUI seeking company to provide garbage, compost and recycling collection services

Wanted_ Garbage, Recycling Organics ContractorLast Fall, City Council committed to bringing more oversight to Chestermere Utilities Inc. (CUI) and finding ways to bring stability to utility rates. While the final structure of CUI has yet to be determined, Council is exploring the option of outsourcing garbage, compost and recycling services.

“We recognize that our residents are feeling the pressure of utility rate fees,” says Mayor Marshall Chalmers, who is also the Chair of the Board of CUI. “We are working hard to find solutions for all utility services and are starting with garbage, compost and recycling services.”

Earlier in January, the City and CUI announced that they were issuing a formal ‘Request for Expressions of Interest’ to gather information on what it could look like to outsource waste collection and processing.

Council reviewed the results of that initial exploration which included submissions from nine different companies. Pleased with sufficient interest and a variety of options, City Council has chosen to issue a ‘Request for Proposals’ that seeks official tenders from companies on how they would provide this service and for how much.

“Our first priority is to provide safe, stable and sustainable utility services to Chestermere residents,” says Mayor Chalmers. “Having looked at other options, outsourcing waste collection appears to be the most promising route at the present time so we will continue to explore the possibilities in front of us.”

Regardless of what contractor is selected, Mayor Chalmers would like to remind residents of the importance of proper sorting of garbage, recycling and organics.

“We get charged extra when there are ‘contaminated’ bins with items that don’t belong there. I encourage all residents to do their part and ensure they are sorting their items properly,” he said. Residents can expect to see reminders about what goes where in the coming weeks.

The RFP is now available at www.chestermere.ca/bids and will be open until March 22, 2019.

February 19: Council Directs Administration to issue an RFP

Council directed Administration to work cooperatively with CUI to issue a Request for Proposals for waste collection and processing services, including provisions for alternate technologies as a waste option.

January 3: City seeking expressions of interest for waste collection and processing services

The City and CUI are working together to explore how residents will continue to receive waste collection and processing services, with the possibility of outsourcing these services to third-party provider(s).

In November, City Council narrowed down the options for the future delivery of CUI services and 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.

To better understand the feasibility of outsourcing waste and recycling collection, and the costs associated, the City and CUI have posted A Request for Expression of Interest (RFEOI).

“This will better help determine the external interest in providing the service and at what cost to the taxpayers,” says Mayor Marshall Chalmers.

The intent of this RFEOI is to identify interested respondents prior to proceeding to a potential next stage of a Request for Proposal (RFP) process.

The RFEOI can be viewed on the City’s website here and has a submission deadline of February 1, 2019.

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 22

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

CUI OfficeDear Chestermere Utilities Incorporated Stakeholders, Staff and Vendors,

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.