After a record-breaking profit year for Hydro Ottawa, the city is getting an extra $1.2-million dividend from the utility.
But local taxpayers shouldn’t expect to see their hydro rates drop anytime soon.
The company pulled in $32.4 million in net income in 2015, compared to just over $30 million the previous year, according to an annual Hydro Ottawa report presented to council on Wednesday.
As a result, the company is giving a record $19.4 million in dividends back to the City of Ottawa, compared to $18.2 million in 2014.
Under a new dividend policy, Hydro Ottawa is trying to improve its debt-equity ratio because its credit rating has slightly dipped. It’s a complicated new formula that allows the company to reassure bond issuers while generating more revenue, explained Hydro Ottawa board chair Jim Durrell, who’s also a former mayor of Ottawa. The company is borrowing funds to pay the city’s dividend.
“This is not us trying to pull a fast one on the city,” Mr. Durrell said.
City manager Steve Kanellakos said the city will revisit the policy after five years, but said it provides consistency in the meantime.
“We’re in a great, solid position,” he said.
Mayor Jim Watson said wage settlements and inflation will likely eat up much of the extra hydro dividend. Otherwise, the city will have to figure out how to distribute the cash.
Over the next five years, Hydro Ottawa is also planning to pour $500-million into new capital infrastructure.
Because the Ontario Energy Board regulates hydro rates, the profit increase will not affect homeowners’ bills.
In fact, hydro users should expect to see their rates increase by an average 2.6 per cent every year over the next five years.
This article originally appeared on metronews.ca on June 22.