Authority: Strategic Policies and Priorities Committee Report No. 10, Clause No. 1,
as adopted by City of Toronto Council on June 9, 10 and 11, 1999
Enacted by Council: June 11, 1999
CITY OF TORONTO
BY-LAW No. 374-1999
To transfer the employees, assets, liabilities, rights and obligations of the Toronto Hydro-Electric Commission and
the City of Toronto associated with the generation, distribution, transmission and retailing of electricity and
associated business activities to Toronto Hydro Corporation, Toronto Hydro-Electric System Limited and Toronto
Hydro Energy Services Inc., Business Corporations Act (Ontario) corporations to be incorporated under Section
142(1) of the Electricity Act, 1998 and Sections 71 and 73 of the Ontario Energy Board Act, 1998.
WHEREAS under Section 145(1) of the Electricity Act, 1998 the Council may make by-laws transferring employees,
assets, liabilities, rights, and obligations of the City of Toronto (the "City") or of a commission or other body through
which the City generates, transmits, distributes or retails electricity, to a Business Corporations Act corporation
incorporated under Section 142 of the Electricity Act, 1998;
AND WHEREAS the City generates, transmits, distributes and retails electricity through the Toronto Hydro-Electric
Commission;
AND WHEREAS Council is authorizing the incorporation of Toronto Hydro Corporation, Toronto Hydro-Electric System
Limited and Toronto Hydro Energy Services Inc. (collectively, the "Corporations") under Section 142(1) of the Electricity
Act, 1998 and Sections 71 and 73 of the Ontario Energy Board Act, 1998 for the purpose of generating, transmitting,
distributing or retailing electricity and associated business activities and the incorporation of any further Subsidiaries
necessary for carrying out any such activities;
The Council of the City of Toronto HEREBY ENACTS as follows:
1.1 Definitions.
As used in this By-law, the following terms shall have the meanings indicated
A. ACT - The Electricity Act, 1998, and any regulations thereunder.
B. ASSETS - Except for Excluded Assets, all assets, interests, property, rights and undertakings, registered or unregistered,
secured or unsecured, of the Commission and the City held or used by either of them for the purpose of generating,
distributing, transmitting or retailing electricity and carrying on associated business activities on the Effective Date,
including the following:
(1) Cash, Accounts Receivable - All of the cash on hand, and all accounts receivable of the Commission including without
limitation, all customer and trade accounts, notes receivable, book debts and other debts due or accruing to the
Commission and the benefits of all security and security deposits for such accounts and debts.
(2) Computer Hardware and Software - All computer hardware and software, including all rights under licences and other
agreements or instruments relating thereto.
(3) Contracts, Rights - The full benefit of all franchise, licence or management agreements and all other contracts,
commitments, rights, choses in action, benefits, arrangements, understandings, and agreements, written or oral, to which
the Commission is a party or otherwise including:
(a) All written or oral contracts, agreements, commitments, undertakings, rights and arrangements.
(b) All forward commitments to the Commission for supplies or materials entered into in the usual and ordinary course of
business whether or not there are any written contracts with respect thereto.
(4) Employee Agreements: All contracts, agreements, and commitments in respect of Employees as at the Effective Date to
which the Commission is a party or by which it is bound, including:
(a) All collective agreements.
(b) All contracts of employment.
(5) Employee Plans: All employee benefit plans, pension plans, bonus or incentive plans, employee medical insurance and
disability plans and savings plans.
(6) Goodwill: The goodwill of the Commission, including:
(a) The exclusive right of any of the Corporations to represent themselves as carrying on a business in continuation of and
in succession to the Commission and the right to use any words indicating that their business is so carried on.
(b) All records of sales, customer lists, customer data and supplier lists of or used by the Commission.
(7) Insurance Policies - The full benefit of all policies of insurance of the Commission.
(8) Intellectual Property - All of the right, title, benefit and interest of the Commission in and to all registered trade marks,
trade names, brand names, patents and copyrights, all unregistered trade marks, trade names and copyrights and all patent
applications, trade mark registration applications and copyright registration applications, both domestic and foreign, owned
or made by the Commission, including without limitation those described in Schedule A.
(9) Inventories - All inventories and supplies including, but without limitation, all finished goods, work in progress, raw
materials, production and shipping supplies and maintenance items and all other materials and supplies on hand to be used
or consumed in the production of products.
(10) Know-How - All patterns, plans, designs, research data, copyrights, trade secrets and other proprietary know-how,
processes, drawings, technology, unpatented blueprints, flow-sheets, equipment and parts lists and descriptions and related
instructions, manuals, data, records and procedures and any and all data owned or used by the Commission, and all
licences, agreements and other contracts and commitments relating to any of the foregoing to which the Commission is a
party.
(11) Licences and Permits - The full benefit of all licences, registrations, permits, consents, quotas, approvals, certificates,
and other authorizations including those described in Schedule B.
(12) Machinery and Equipment - All machinery and equipment, metering and measurement devices, hot water heaters and
appliances and all goods and chattels and other personal property and all tools, handling equipment, furniture, furnishings
and accessories.
(13) Plant, Building, Fixtures - All plant, buildings, structures, erections, improvements, appurtenances and fixtures
(including fixed machinery and fixed equipment) conduits, pipes, poles, wires, rods, cables, fibres and other apparatus,
devices, appliances and equipment, materials, works, transformer stations, transformers, vaults, transmission lines,
distribution lines, ducts, pipelines, fittings, apparatus, meters, wheresoever situate on property owned by the Commission
or the City, on private property and on public property.
(14) Prepaid Expenses - All pre-paid expenses and deposits the benefits of which will accrue to any of the Corporations.
(15) Real Property Interests - All lands, premises, freehold and leasehold property interests, mortgages, charges,
agreements, notices of agreements, debentures and security interests which create an interest in land, liens, easements,
rights of way, licences, and rights to use or occupy real property, and all other rights or interests therein and fixtures
thereon, including the relevant interests in the assets listed in Schedule C.
(16) Records - All personnel records, inspection records and all other records, books, documents and data bases relating to
Employees, the Assumed Liabilities, the business of the Commission, or to the Assets in the possession or under the
control of the Commission.
(17) Reserves - The portion of any reserve fund established pursuant to section 33 of the Development Charges Act, 1997
that relates to development charges collected in respect of electrical power services, and the portion of any reserve fund
referred to in section 63 of the Development Charges Act, 1997 that relates to development charges collected in respect of
electrical power services, as set out in Schedule D.
(18) Vehicles - All trucks, cars and vehicles of all kinds.
(19) Warranties - The full benefit of all warranties and warranty rights, implied, express or otherwise, against
manufacturers, suppliers or sellers which apply to any of the Assets and the net realizable value of any warranty claims
relating to the Assets outstanding as of the Effective Date.
C. ASSUMED LIABILITIES - Other than Excluded Liabilities, all of the debts, liabilities and obligations of the
Commission.
D. BODY CORPORATE - A firm, partnership, unincorporated association, joint venture, body corporate, corporation,
bank, trust, pension fund, union, government agency, board, tribunal, ministry, or commission or other legal entity of any
kind whatsoever, but excludes an individual or natural person.
E. COMMISSION - The Toronto Hydro-Electric Commission, established under Section 9 of the City of Toronto Act,
1997, and deemed a commission under Part III of the Public Utilities Act.
F. EFFECTIVE DATE - The date for each transfer set out in Section 6-1.
G. EMPLOYEES - All full-time and part-time, union and non-union, employees and officers of the Commission, including
all trainees, and probationary employees, on the Effective Date.
H. EXCLUDED ASSETS - The assets described in Schedule E.
I. EXCLUDED LIABILITIES - The liabilities described in Schedule F.
J. OBCA - The Business Corporations Act (Ontario), and any regulations thereunder.
K. OEB - The Ontario Energy Board.
L. OEBA - The Ontario Energy Board Act, 1998, and any regulations thereunder.
M. PERSON - Any individual, a natural person or body corporate.
N. SUBSIDIARY - With respect to Toronto Hydro Corporation, any Body Corporate of which more than 50 percent of the
outstanding securities of any class carrying exercisable voting rights are beneficially owned, directly or indirectly, by or for
Toronto Hydro Corporation, and includes any Body Corporate in like relation to a Subsidiary.
1-2. Interpretation.
In this By-law, unless a contrary intention appears:
A. Words importing the singular shall include the plural and vice versa and words importing gender shall include all
genders.
B. If any section of this By-law is invalid or ultra vires the City it shall not affect the operation of the remaining portions of
this By-law.
C. The following Schedules are attached and form part of this By-law:
(1) Schedule A - Intellectual Property
(2) Schedule B - Licences and Permits
(3) Schedule C - Real Property Interests
(4) Schedule D - Reserves
(5) Schedule E - Excluded Assets
(6) Schedule F - Excluded Liabilities
(7) Schedule G - Allocation of Consideration
D. This by-law is binding on the City, the Commission, the Corporations and all other Persons.
E. In accordance with the Act, this By-law applies despite any general or special act or any rule of law, including any act or
rule of law which requires notice or registration of transfers; provided, however, the Corporations may register such
documents, instruments and agreements, including certified copies of this By-law, as may be necessary or desirable in
order to evidence or confirm such transfers.
F. Where the context requires, Corporations shall include any Subsidiaries.
G. Under Subsections 9(4) and (5) of the City of Toronto Act, 1997, all of the assets and liabilities and other rights and
obligations relating to the distribution and supply of electricity of the public utility commissions of the former
municipalities of East York, Etobicoke, North York, Scarborough, Toronto and York were vested in the City under the
control and management of the Commission.
H. Under Subsections 9(2) of the City of Toronto Act, 1997, the Commission has all the powers, rights, authorities and
privileges of a municipal public utility commission under Part III of the Public Utilities Act.
2-1. Incorporation.
A. The incorporation of Toronto Hydro Corporation, Toronto Hydro-Electric System Limited and Toronto Hydro Energy
Services Inc., under the OBCA, to continue the generation, transmission, distribution and retailing of electricity and
associated business activities of the Commission and the incorporation of any further Subsidiaries necessary for any such
activities is authorized.
B. Any common shares or other securities issued by any of the Corporations incorporated pursuant to this By-law shall be
issued upon such incorporation in the name of the City.
2-2. Corporate, Shareholder Administration.
A. The City, in its capacity as initial shareholder of the Corporations, shall execute and deliver any shareholder agreement,
direction or declaration to provide for the organization, management and administration of the Corporations and any
further Subsidiaries, in a form approved by Council of the City.
B. The City and the Commission shall execute and deliver to the Corporations, where necessary, in form suitable for
registration, recording and filing with such public authorities as may be reasonably required by the Corporations, any bills
of sale, assignments, instruments of transfer, assurances, consents and other documents necessary to effectively transfer to
the Corporations all the City and the Commission's right, title and interest in the Assets.
3-1. Transfer to Corporations.
A. All the Assets and Assumed Liabilities of the Commission and the City and Employees associated with the generation,
distribution, transmission and retailing of electricity and associated business, except for the Excluded Assets and Excluded
Liabilities, are transferred to and assumed by the Corporations in accordance with the Act and this By-law as set out in
Subsections 3-1B, C, D, E and F.
B. On the Effective Date the Assets and Assumed Liabilities of the Commission and the City used in connection with
owning and operating an electricity transmission and distribution system are transferred to and assumed by Toronto
Hydro-Electric System Limited.
C. On the Effective Date the Assets and Assumed Liabilities of the Commission and the City used in connection with
electricity generation, co-generation, district cooling or other energy services are transferred to and assumed by Toronto
Hydro Energy Services Inc.
D. On the Effective Date the Employees of the Commission used in connection with owning and operating an electricity
transmission and distribution system are transferred toToronto Hydro-Electric System Limited.
E. On the Effective Date the Employees of the Commission used in connection with electricity generation, co-generation,
district cooling or other energy services are transferred to Toronto Hydro Energy Services Inc.
F. Subject to an order of the OEB granting leave under Section 86 of the OEBA, the City shall, and shall be deemed to,
have transferred as of the Effective Date all of the voting securities in Toronto Hydro-Electric System Limited and Toronto
Hydro Energy Services Inc., which were issued to the City under Subsections 4-1B and D of this By-law, to Toronto Hydro
Corporation in consideration of the issuance to the City of voting securities by Toronto Hydro Corporation.
G. Any of the Assets and Assumed Liabilities of the Commission and the City and Employees which are transferred to the
Corporations pursuant to this By-law may be transferred to any Subsidiary on such terms and for such consideration as the
directors of the transferring Corporation may from time to time approve, subject to Subsection 4-1H of this By-law. The
City, the Commission or the Corporations may enter into any agreements or other documents required to evidence the
transfers.
H. The Employees transferred to the Corporations, in accordance with Sections 145 and 147 of the Act, shall cease to be
Employees of the Commission from and including the Effective Date and shall thereupon be employees of one of the
Corporations.
I. Excluded Assets and Excluded Liabilities will not be transferred to the Corporations.
J. Despite any other provision of this By-law or the Electricity Act, 1998, if any of the Assets shall not be assignable, or
shall only be assignable with the consent or approval of any other third party, the City or the Commission shall:
(1) use all efforts in co-operation with the assignee Corporation to secure the consent required in connection with those
assignments and all costs of obtaining any consent will be paid by the assignee Corporation; and
(2) pending the effective transfer thereof, hold all rights or entitlements that the City or the Commission has thereto in trust
for the exclusive benefit of the assignee Corporation provided that the assignee Corporation shall pay, perform and
discharge all obligations arising or accruing with respect thereto during such period.
4-1. Consideration and Financing.
A. All costs and expenses incurred or to be incurred by the City and the Commission and all provincial taxes incurred or
payable in connection with the transfer of the Assets shall be borne by the Corporations and the Corporations shall
reimburse the City and the Commission on demand for any such costs, expenses or taxes.
B. The Assets transferred to Toronto Hydro-Electric System Limited under Subsection 3-1B of this By-law shall be
transferred at their respective fair market values on the Effective Date. The fair market value of the Assets shall be deemed
to be book value on the Effective Date subject to adjustment under Subsections 4-1H and 5-1C of this By-law.The
consideration payable by Toronto Hydro-Electric System Limited for the Assets transferred under Subsection 3-1B shall be
satisfied as follows:
(1) by the assumption by Toronto Hydro-Electric System Limited of the Assumed Liabilities referred to in Subsection
3-1B; and
(2) as to the balance by:
(a) the issuance and allotment to the City of 1,000 fully paid and non-assessable common shares of Toronto Hydro-Electric
System Limited having an ascribed value equal to 40 percent of such balance which amount shall be added to the stated
capital account for such shares, and
(b) the issuance by Toronto Hydro-Electric System Limited to the City of a promissory note having a principal amount
equal to 60 percent of such balance, such note to be due and payable on December 31, 2000, to be non-interest bearing
until December 31, 1999; and to bear interest at an effective rate of 6% per annum from January 1, 2000 until the City
chooses to redeem or until December 31, 2000, whichever comes first, calculated and payable quarterly and to be in form
and content satisfactory to the Treasurer of the City.
C. On or before the maturity date of the promissory note referred to in Subsection 4-1B(2)(b), the City, after consultation
with Toronto Hydro Corporation, may exchange the said promissory note for one or more debt instruments of Toronto
Hydro-Electric System Limited having a form and content satisfactory to the City as evidenced by the written acceptance
by the Treasurer of the City.
D. The Assets transferred to Toronto Hydro Energy Services Inc. under Subsection 3-1C of this By-law shall be transferred
at their respective fair market values on the Effective Date. The fair market value of the Assets shall be deemed to be book
value on the Effective Date as determined under Subsections 4-1H and 5-1C of this By-law. The consideration payable by
Toronto Hydro Energy Services Inc. for the Assets transferred under Subsection 3-1C shall be satisfied as follows:
(1) by the assumption by Toronto Hydro Energy Services Inc. of the Assumed Liabilities referred to in Subsection 3-1C;
and
(2) as to the balance by the issuance and allotment to the City of 1,000 fully paid and non-assessable common shares of
Toronto Hydro Energy Services Inc. having an ascribed value equal to the aforesaid balance which amount shall be added
to the stated capital account for such shares.
E. The transfer under Subsection 3-1F shall be deemed to have been effected at the aggregate fair market value of such
voting securities as determined by the City Treasurer and an amount equal to such aggregate fair market value shall be
added to the stated capital account of the shares of Toronto Hydro Corporation.
F. The consideration payable by the Corporations shall be allocated among the Assets as set out in Schedule G and the
Corporations shall report the transfer of the Assets in accordance with the provisions of Schedule G.
G. The Reserves are transferred to Toronto Hydro-Electric System Limited to be used only to pay for capital costs in
respect of electrical power services for which the Reserves were collected.
H. The fair market value of the Assets, and the amount of the Assumed Liabilities transferred under this By-law to the
Corporations on the Effective Date, shall be determined by the Treasurer of the City in consultation with the Corporations.
I. The Corporations shall be bound by, assume, pay, satisfy, discharge, observe, perform and fulfil, and indemnify and save
harmless the City from and against the Assumed Liabilities assumed by them respectively.
4-2. Transfer Exemptions.
A. Any transfer of Assets under this By-law is exempt from land transfer tax and retail sales tax under Section 159 of the
Act.
B. Any transfer of Assets under this By-law is exempt from the provisions of the Bulk Sales Act (Ontario) under Section
159 of the Act.
C. Any transfer under this By-law will constitute the transfer of all or substantially all of the Assets necessary for the
relevant Corporation to carry on the business transferred to it as a business. The City and the relevant Corporation, both
being registered for Goods and Services Tax purposes, undertake to sign the election provided for in Section 167 of the
Excise Tax Act and the relevant Corporation shall file the election in accordance with the provisions of that Section so that
the transfer is not subject to Goods and Services Tax.
5-1. Consideration Adjustment.
A. The fair market value of the Assets transferred under Subsection 3-1B of this By-law is dependent upon the permitted
rate of return on equity and the rates that the OEB will allow Toronto Hydro-Electric System Limited to charge for the
distribution of electricity under the OEBA.
B. The fair market value of the Assets transferred and the consideration payable in Subsections 4-1B and D of this By-law
may be adjusted as a consequence of any OEB rate order for the year 2000 or subsequent years and any valuation of the
Assets subsequent to the enactment of this By-law.
C. Any consideration or revised consideration payable under this By-law shall be determined by the Treasurer of the City in
consultation with the Corporations.
D. All necessary adjustments to the consideration payable under this By-law shall have the same effect as if they were
made on the Effective Date
6-1. Effective Date of Transfer.
A. The Effective Date of the transfers set out in Subsections 3-1B, C and F is July 1, 1999.
B. The Effective Date of the transfers set out in Subsections 3-1D, E and H is January 1, 2000.
ENACTED AND PASSED this 11th day of June, A.D. 1999.
CASE OOTES, NOVINA WONG,
Deputy Mayor City Clerk
(Corporate Seal)
SCHEDULE A
INTELLECTUAL PROPERTY
(Trademarks, Official Marks, Patents, Copyrights, and Business Names)
