Included in this annual report are the corporation's financial statements for the year ended December 31, 2019, which have been prepared in accordance with International Financial Reporting Standards. 

Balance Sheet

At December 31, 2019, Kingston Hydro has cash available, as represented by Cash and Due from the City of Kingston, of $7 million to fund current liabilities.

Kingston Hydro's gross capital assets increased $5 million, to $72 million.

The net book value of the capital assets amounted to $60 million, compared to $58 million in 2018.

Kingston Hydro increased its long-term borrowing in 2019 by an additional $3 million to assist in the funding of infrastructure renewal projects, totalling $5 million. Approximately $835,000 in long-term loans were repaid in 2019. 

As a result of the above, total debt increased from $33 million in 2018 to $35 million in 2019.

The net balance of the regulatory deferral account balances at the end of the year is a debit of $4 million. This amount is the accumulated difference between costs incurred for energy and transmission, and amounts collected from customers. This difference is expected to be collected from customers in the future, after  an Ontario Energy Board (OEB) rate approval.  

Statement of Earnings

In 2019, total energy sales increased by $5 million to $81 million and the cost of energy also increased by $5 million to $82 million. The excess cost of energy for the year forms part of the regulatory balances recorded on the balance sheet, which is referenced above.

Distribution revenue increased by $400,000 due to an OEB-approved rate increase. Energy consumption decreased by 2.3 per cent over 2018.

Operating expenses decreased $300,000 from 2018.  The decrease is a result of efficiencies in overhead maintenance and operations in 2019.

Finance costs for 2019 were slightly higher than in 2018, offset by an increase in finance income.

Net earnings and net movements in regulatory deferral account balances increased by $800,000 in 2019, for a balance of $2.5 million for the year.  

Statement of Cash Flows

In 2019, Kingston Hydro recorded additions to capital assets of $4.8 million, which were partially offset by an increase in deferred revenue in the amount of $83,000.

The Company returned dividend payments of $800,000 to its sole Shareholder, the Corporation of the City of Kingston. When combined with interest payments to the City, the total return to the Shareholder in 2019 was $1.4 million.

Management’s Responsibility for Financial Reporting

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

Fulfilling this responsibility requires the preparation and presentation of financial statements and other data using management’s best judgement and estimates.

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.

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 relevant, accurate, timely, and reliable information in all material respects.

The Board of Directors of Kingston Hydro Corporation is responsible for ensuring management has implemented the necessary systems, procedures and internal 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.

The Board of Directors exercises this responsibility through the Audit and Risk Committee. The Audit and Risk Committee consists primarily of independent directors and reviews audit, internal control and financial reporting matters with management and external auditors. The Audit and Risk Committee also considers the independence of the external auditor and reviews their fees. The external auditors have access to the Audit and Risk Committee without the presence of management. The Audit and Risk Committee reviews the financial statements and reports its findings to the Board for consideration when approving the financial statements for issuance to the Shareholders.

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.

On behalf of Management,