Included in this annual report are the corporation's financial statements for the year ended December 31, 2016, which have been prepared in accordance with International Financial Reporting Standards. 

Balance Sheet

At December 31, 2016, Kingston Hydro’s gross capital assets amounted to $54 million, compared to $45.1 million in 2015.

The net book value of the capital assets amounted to $49 million, compared to $42 million in 2015. This amount has increased every year since 1998, when the net book value of the capital assets in service was $19.7 million. Kingston Hydro has committed to upgrading and re-investing in ageing infrastructure to ensure sustainable electricity distribution for the future.

Kingston Hydro increased its long-term borrowing in 2016 by an additional $3.5 million to fund infrastructure renewal projects. Approximately $830,000 in loans was repaid in 2016, related to capital loans that were obtained in prior years.

The net balance of the regulatory deferral accounts at the end of the year is $9.2 million, an increase from $6.5 million in 2015. This amount is primarily made up of an amount receivable from customers related to the global adjustment, which should ultimately be recovered from ratepayers through future rate adjustments, as approved by the Ontario Energy Board.

There was an increase of $3 million in short term borrowings that were used to fund the increase in the regulatory deferral accounts.

As a result of the above, total debt increased from $31.2 million in 2015 to $36.9 million in 2016.

Statement of Earnings

In 2016, total revenue increased to $13.5 million from $11.4 million in 2015. The increase in revenue is related to one-time conservation and demand management revenue, as well as one-time distribution revenue. 

Operating expenditures of $9.4 million were eight per cent higher than in 2015, mainly due to expenses related to line maintenance and increased conservation program efforts. 

Interest expense for 2016 approximated 2015 and includes interest paid to the company’s sole shareholder, the Corporation of the City of Kingston, in the amount of $639,000.

As a result of the above-noted items, net earnings were $2 million, compared to $726,000 in 2015.

Statement of Cash Flows

In 2016, Kingston Hydro recorded additions to capital assets of $8.7 million. Of this, $2.6 million related to work done in 2012. This amount was transferred from a regulatory deferral account in 2016, as per Ontario Energy Board regulatory accounting requirements.

The company returned dividend payments of $801,000 to its sole shareholder, the Corporation of the City of Kingston in 2016.  

Management’s Responsibility for Financial Reporting

The accompanying financial statements and related financial information are the responsibility of the management of Kingston Hydro Corporation.

These financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and set out in the CPA Canada Handbook, and involve management making best estimates and judgements.

In addition, management is responsible for establishing and maintaining an adequate system of internal control to ensure assets are safeguarded and the accounting systems provide accurate, timely, and reliable information.

The Board of Directors of Kingston Hydro Corporation is responsible for ensuring management has implemented the necessary systems, procedures and controls required to ensure the reliability and timeliness of the financial information. The Board is also responsible for reviewing the financial statements with management and approving the financial statements.

KPMG LLP, the independent auditors appointed by the Board of Directors, are responsible for providing an audit opinion on the financial statements based on the results of their audit tests and procedures.