2011-11-15

EMC is Lean and Linked ... Over 150,000 individual Members! EMC: 950+ Corporate Mfg. Members! Over 5000 members engaged each week! Communication reach to al l sectors: 100,000+ touch points every week! 53 Consortium Regions

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2011-11-15

0

0

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2011-11-15

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Why Focus on Manufacturers?

There are three primary methods of creating new wealth in our economy:

1. You BUILD it.

2. You GROW it.

3. You DIG it out of the ground.

The MANUFACTURING SECTOR has the greatest potential t o rapidly affect change in our local economy ...

3

2011-11-15

Cha I lenges for Industry ... China Syndrome: Increasing competition from China, Mexico, India ... and around the World

Aging Canadian Workforce: Within the next decade:

- For every 2 people who retire, only one person will be available to replace those positions

Canadian Dollar: +$ Par is not always a good score! Rising Cost of Business: - Energy, Utilities, Health Care Benefits and Overall

Business costs are continuing to grow

EMC Presence in London

Members in the Food & Beverage sector: Labatt The Original Cakerie Kellogg McCormick Canada

* Cargill Argo Pure (Bright Cheese) Heritage Coffee Kerry Canada

All employ 100+ (except Heritage Coffee)

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2011-11-E

Our challenge is to level the field.

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1511 11201 1

November Sth, 2011

Brewing beer in London since 1847

Part of Anheuser-Busch InBev: 18 breweries in North America Focus on 'Better World' initiatives:

- -

i. Environmental, Community & Responsible U5e

Compete externally with other beer comDanies for &

Compete internally with other Labatt breweries for Droduction volume ,

, Proven water conservation

London Brewery is Labatt's "Hometown Brewery". We are proud of our London heritage

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15/11/2011

~~ ~~~~~~~~ ~~~ ~. ~~ ~~ ~~ ~

$27 Million in salary and wages

450 employees

Since 2004, $77 rniiiion in capital expenditures

Normal course of business economic spinoffs - transportation, raw materials to name a few

Sponsorship

Community investment

MUSEUM LONDON

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15/11/2011

.~.. ~~ ~~~ ~ ~~~ ~~

Our London Brewery has extra capacity to draw new brands, volume into the plant - we can grow

Beer market trends: smaller size, specialty brands - - Must justify volume addition by being the low cost producer

Additional volume may require new capital expenditures which will bring construction investment into London‘s economy

London Brewery is “Open for Business“ but need City of London‘s support to keep us competitive & relevant in decisions to allocate brewery volume

- - _ -~ _ _ ~

45% REDUCTION ! Winner of OWWA 2011 Award of Excellence in Water Efficiency

London Water Usage 2005 to 2012 - ~~ -~

E t

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15/11/2011

$0.80

$0.70 -- __-___...

57% INCREASE IN RATE OVER 7 YEARS INCREASES ARE MUCH HIGHER THEN INFLATION

-Total Water & Sewer Rate - actual

+Total Water & Sewer Rate - CPI inflation

-

Labatt London Water & Sewer Rate

~ ...... ~.~ ......... ~

.. ~ ~ ~. .~ ~~~ . ~~ ~. Compete internally with other Labatt breweries for production volume - must stav a low cost Droducer in order to arow and re-invest in London

Labatt is London proud - 167 years - Brewery employees - Construction jobs - Materials, Transportation, etc. - Community investment

Proven water conservation BUT this is not producing cost savings due to large increases annually t o water and sewer rates

RECOMMENDATION: Continue water rate freeze or reduce any rate increase to be in line with rate of inflation

4

Combined water and sanitary sewer rate changes - -

2010 vs 2005 - 82% increase in spending on 9% lower aggregate volume 2009 vs 2005 net of strength surcharges (phosphorous)- 32% increase on 4.5% lower aggregate volume

City of London chose to begin billing for Phosphorous in 2007 (in accordance with existing bylaws) which added significant incremental costs to Casco - Phosphorous comes in as part of the corn and reports to sludge in our pre-treatment

system. Phosphorous could be removed based on trial work here with clarification and sludge dewatering (42 .5MM capital cost)

Average unit potable water costs for sister operations in USlCanada are 50% of London’s current rate with closest being California - still 23% lower than London’s 2007 rate Incremental costs already realized for Casco represent lOFTE Parent corporation expects us to deliver 2-3% savingdyear. All increases in costs realized are expected to be offset with savings in other areas Contradicts the City’s strategic decision attract and retain businesses in the Agrifood /Agribusiness sector by incrementally reducing attractiveness and competitiveness

-

Planning, Environmental & Engineering

Water and Wastewater Services “Critical” fundamental public services - Health care and Environmental Business

Protection and maintenance of health

- Fire Protection Saves lives

- Quality of Life Services Water supply and Wastewater treatment

1

Water and Wastew

Renewal, operation and maintenance of water supply and wastewater and treatment systems

Drinking water quality management compliance Long-term system planning and modeling Customer billing contract management

Reservoirs, Pump Stations, Pipes, Water Meters, Storm Water Management Facilities, Treatment Plants

- Sewer $3.6 billion

Why We Need To Invest Proper operation of the system for the health of Londoners Support economic development and growth Enable us to live and grow as a community Address the infrastructure gap - Renew aging and deteriorating infrastructure

Compliance with regulatory/environmental requirements Consumption reductions Ensure intergenerational equity - While deferring future expansions

Avoiding future debt

2

Water Consumption I

--. . _-. , C 1 * . * &

Addressing Revenue Reductions Due to Declining Water Consumption?

o Rate Structure Review analysis underway Cost of servicing rate review (Deferred) Fixed component vs. variable component - Anticipated reporting back to Council by year-end

o Exploring opportunities to generate other revenue

o Utilize Senior Government funding opportunities sources

,Future rate increases to be adjusted if other funding urces become available

3

Water & WWT Financial Infrastructure Gap Financial Infrastructure Gap - Combined W a t e r W infrastructure

gap = $450 M+ I WATER 8 WWT - Objective to manage gap to acceptable

levels (cannot eliminate) "Gap"showing up as - frequent equipment failures, main

- more extensiveltoo frequent breaks, etc.

- Addressing consumption decline cunm - Increasing capital funding rpnr 2ol&..Iulurc

. . - Leveraging new technology I innovation ,.I .,.to minimize operating costs , ,

4

- 2012 Utility Budgets

n NEED TO INVEST "

Sustaining Our Future

1 Utility strategy: - Continued protection of health and environment - Support economic development

Generate jobs Industrial strategy

Fire protection Quality management and quantity management

- Investing in service improvement

5

Residential Charges - Water/ WWT

ComRorcIaI Charges .Water IWWT

1

IndustrialCharges. Water1 WWT

S IC00 I

Residential Rate Change Comparison 2010 - 2011

l% 8 Water W sanitary

6

Long-Term Financial Sustainability Impacts

WATER

Residential Water Savings Average Cost of Annual Water Blll

(persingle farnllyhorne) 0 .

. .- . .

CnlarrUmYiw .Iwml*wlll M(m'n7Jlhod

......... "

. . . . . .

7

Strategies For Reducing Consumption And Ultimately Costs

a

Water $1 - refill your reusable bottle 1,238 times

I Average cost per day = 87 cents

Sewer A flus I

I costs less than 2@

--..--,. C " " A O * lI/li~''~'~"

It Is Therefore Recommended ....

To increase Water rates by 8% and

Wastewater and Treatment rates by 7%

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QUESTIONS?

Water Background

Asset Value of $1.8 billion (including Joint Water Boards plant & pipelines) High water quality & service reliability (incl. fire protection)

Infrastructure risk mitigation - Failure cost, property damage, lost water and social disruption

Increasing regulatory standards Revised Financial Plan received by the MMAH in 201 1

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C * U * D *

Wastewater & Treatment Background

Asset Value of $3.6 billion

Many system deficiencies developed over decades

Significant investment required

High debt servicing costs b 201 1 - debt servicing of 13.2M and total potential

debt of $1 30M

Value b huge benefit to community

\ Sustainability in 2018 \

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Lifecycle Renewa I

Trenchless installation of a new replacement main utilizing a

directional drill unit

, ,. , . , . ,, .,..,, ,' . , . , . ~,.;,,'.:.: .

. . , , . . , .,

Trenchless Reha Tech n i a ues

,, .':Cement , ., mortar lining providing Structural lining providing <&a$erq.uality ::::' ~.> x~ ~.. and hydraulic ..,,.R$@~,ditioning of an existing main

water quality, hydraulic and structural reconditioning of an existing main

,'\~,, ., .~ ~, ..;. .,

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Approach to New

Reduced excavation Proactive inspection and reinstatement and monitoring

, . .

'.. ,.

Centre Cres Dufferin Ave Hole in the pipe along with cracks and fractures in

sanitary sewer Start of a collapse in the storm sewer

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2012 Sewer Works Horton St E Burnside Dr

Improperly cappedabandoned PDCs allowing bedding granular material to enter pipe

(Sanitary sewer)

Heavy encrustation caused by infiltration, along with cracks and possibly fractures (Sanitary sewer)

Gordon Avenue Emergency Work

Major trunk sewer - >27 MLD dry weather flows up to 200 MLD peak wet weather flows Successful relining - quick turn around - more to come

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Water Scenario 3% In 2012 And Beyond

30 0% ... .. . . .... ~~ ~ -

-. 20.05 (Y

E .- 15.0% -

Water Scenario Prior Year Financial Plan

a20

$0

___---------- 25.0%

2023 2024 2025 2326 2027 2028 2029 2030 , I , / , , . I I . ! , ,

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Recommended Financial Plan

R

0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 5.0% 3 . W 3.0% 3.0% 3.0% 3.0% 3.0s * A - - - . - A - - - - - _ _ - - - - - - - - -

. , .. . , ., . .. , . ..

; , . I I . , I . , , I . , I , I . I . L

2011 2012 2013 2014 2015 2016 2C17 2018 2010 2020 2021 2M2 2023 2024 2025 2026 2027 202s 2oB 2030 2031

Y E I l

' , , . ,

I -R"I1.FyI- --imR"Il.Fw8.UK. ,, 0- - C U D * R ' . I I I I U Y . 1

30 0%

25.096

20 0%

i

i o 0% ; 150%

E - z?

r son 2

D *

0 0%

3% In 2012 And Beyond

Rate & Debt Comparison 3 R r n

e P 100%

- A n n u a l m e Increase --DebtJeNtclngloRevenue -Cvbt Llmlt

5 Year Capital Plan Impact - ($41 M)

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Prior Year Financial Plan

1: ',. .... . . . , .,,, . . .

. , . ,. ' , , . . . -hnnualRate Ixrem -DebtServiclng To Reven~e -Debtlimit

5 Year Capital Plan Impact - ($5 M) . . , . ' 20 Year Capital Plan Impact - ($80 M)

WWT Scenario Recommended Financial Plan

5 Year Capital Plan Impact - $0

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London Is A Top Performer Non-Revenue Water

Goals of Strategic Financial Plan

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Sewer - Residential

$700 ,

MUNICIPALITY

Water- Residential

1700

MUNICIPALITY

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Value to the C

I

Long-Term Financial Sustai na bi lity Impacts WATER

Rate Scenarios

20