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Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
Guidelines for development of renewable energy co-operatives in Ontario
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Guidelines for development of renewable energy co-operatives in Ontario

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Guidelines for development of renewable energy co-operatives in Ontario …

Guidelines for development of renewable energy co-operatives in Ontario
Speaker: Jennifer Heneberry, Co-operative Development Manager, Ontario Co-operative Association

Part of the 2010 Community Power Finance Forum at MaRS:
http://www.marsdd.com/communitypower

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  • You have to actually view the show to see how this works.
  • Co-op structure – not organized as profit/NFP Share Capital vs Non-share capital: Share capital refers to shares offered by the co-op to members or outside investors. Often called member equity. Often used to buy equipment, land, or other fixed assets. Incorporating without share capital means that the co-op must rely on debt financing to raise money. Fine for covering operating expenses such as supply purchasing. Co-ops can combine debt financing with share capital. Shares pay a return to members. On Co-op is organized as a co-op without share capital. In BC, the BC Co-op Association has share capital and pays dividends back to members. Revenue and distribution of surplus Revenue used to buy assets and pay expenses. In co-ops surplus can be distributed to members through patronage, which is usually distributed based on how much business a particular member does with the co-op. payments can be in cash or in additional patronage loans.
  • For co-ops: Non profit does not mean NO profit NFP – community focus Co-ops better the lives of their members (not always the same); membership is the end benefit, community is ancillary In Canada. Profit/NFP is defined by Canada Revenue Agency. Essentially means that the organization does not operate with the primary purpose of generating profit.
  • Transcript

    • 1. Guidelines for the Development of Renewable Energy Co-ops Community Power Financing Forum May 10 th , 2010 Jen Heneberry, Co-op Development Manager, Ontario Co-operative Association
    • 2. INTRODUCTION
    • 3. What is a co-op?
      • Co-ops are member-owned enterprises
        • Primary purpose is to meet the needs of members
      • An internationally recognized business model
        • Incorporated under provincial or federal legislation
        • Similarities to not-for-profits and private businesses
        • Can be used in virtually all business scenarios
      • Democratically controlled: One-member, one-vote, regardless of investment in co-op
    • 4. Basic Co-operative Structure
    • 5. Co-ops vs. Business Corporations
      • CO-OPERATIVES
      • Exist to meet needs of members
      • Accountable to members
      • Surplus distributed to members
      • One member one vote
      • Board represents members; directors must be members
      • Shares generally not traded
      • BUSINESS CORPORATIONS
      • Exist to maximize ROI
      • Accountable to shareholders
      • Unlimited return on shareholder capital
      • Vote based on number of shares held
      • Board represents shareholders; director may not be shareholder
      • Shares may be traded
      Refer to detailed comparison sheet for more details Download from www.ontario.coop/toolkit (Factsheet section) OR http://ontario.coop/upload/Co-op%20Comparison%20-%20other%20business%20models-2009.pdf
    • 6. Co-ops vs. Not-for-Profits
      • CO-OPERATIVES
      • Always member controlled
        • One member one vote
      • Mandated to meet the needs of members
      • Board of Directors elected from membership
      • Operate under CC Act or CU&CP Act; with or w/out share capital
      • Surplus & patronage may be distributed to members
      • NOT-FOR-PROFITS
      • Usually member controlled
        • Membership voting classes
      • Broader mandate to the community
      • Board of Directors elected from membership
      • Operate without share capital under Ontario Corp. Act
      • Surplus kept to further goals and objectives of organization
      Refer to detailed comparison sheet for more details Download from www.ontario.coop/toolkit (Factsheet section) OR http://ontario.coop/upload/Co-op%20Comparison%20-%20other%20business%20models-2009.pdf
    • 7. HISTORY OF ENERGY CO-OPS
    • 8. History of Ontario RE Co-ops
      • RE co-ops, based on European models started development after deregulation
      • 1999-2002: TREC/Windshare developed the 1 st project, Ex Place turbine
      • 2002-2004: Several other co-ops were formed in quick succession
        • Larger focus on wind power due to economics
    • 9. History, part two
      • Many used a NFP ‘development’ arm that would seek grants to support early phase work
        • Mimic the ‘TREC/Windshare Model’ with private partnership capital
      • 2003-2006: Barriers related to grid connection, RFP process, co-op regulations increasing
      • New RE co-op start-up slowed down (2008: 23 co-ops listed as energy co-ops)
      • 2009: GEA passed, eliminates many co-op issues
    • 10. RE Co-op challenges
      • Business with members requirement of Co-op Act
        • Co-ops are required to do a majority of business with members
        • Demonstrating the link between members, the co-op and energy purchaser was problematic
      • Offering Statement process and limits
        • Process of raising capital was challenging as a result
    • 11. Green Energy Act Changes
      • Creates newly defined ‘renewable energy’ co-ops
        • Have to meet definition requirements in the Act
      • Removes business with member requirements previously present in Co-op Act
      • Allows RE co-ops to distribute patronage in any way they choose to define it in the bylaws
    • 12. FINANCING CO-OPERATIVES
    • 13. How do co-ops get financing?
      • Equity Source:
        • Members (always) & community investors (sometimes)
        • Shares, bonds or debentures, or member loans
      • Differences in financial statements for co-ops can make leveraging this equity challenging
        • Nature of co-op means that co-op securities show as debt on balance sheet (have to educate lenders)
      • Co-ops can participate in larger financial partnerships to facilitate financing
    • 14. Offering Statements
      • Offering statements are special documents that are prepared for co-ops to use to sell securities to members and others
        • Analogous to prospectus require for OSC
      • Required in certain cases
      • Meant to be a full, plain and continuous disclosure of risk to investor
      • Need to be submitted and receipted by FSCO before co-op can sell securities
    • 15. When is an OS required?
      • If your co-op has less than 35 security holders, you do not need an offering statement
      • More than 35, co-op can still be exempt from an OS if co-op meets certain conditions
      • Two most common are:
        • Raising <$200,000 from members through the offering
        • Members contributing <$1,000/yr, <$10,000 lifetime
    • 16. Additional financing issues
      • Co-op shares can be RRSP eligible if certain conditions are met
        • Co-op has to be considered Canadian Active Business
        • No one shareholder can hold more than 10% of all the shares unless less than 25k
    • 17. Alternate financing
      • Co-ops have explored alternate financing methods to avoid or mitigate OS concerns
      • Co-ops can enter into other financing structures with partners, landowners, developers
        • Exploring combinations of the limited partnership model, where co-op is a partner in LP
        • Co-op as joint venture partner with another partner
        • Term loans or other arrangements with landowners
    • 18. CO-OP SUCCESS FACTORS
      • How to make them work
    • 19. Co-op model is NOT right if…
      • Steering committee not committed to democratic functioning and one-member, one-vote principle
      • Technology or return on investment are the only reasons you want to develop a project
        • (at the expense of process /community buy-in/ member ownership)
      • Co-op model is being explored solely as a way to gather community acceptance
      • You are attempting to develop in saturated market, or in blocked location
    • 20. Contact Infomation
      • Jen Heneberry
      • Co-op Development Manager
      • Ontario Co-operative Association
      • 519.763.8271 x23
      • [email_address]

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