There was no sugar coating it Monday night in the council chambers at Guelph City Hall: Guelph's district energy initiative has been a huge failure thus far.
So much so that its future may be in doubt.
"An inherited embarrassment" is how one city councillor described it following a presentation by its CEO.
Set up by city-owned Guelph Municipal Holdings Inc. at a cost of $14 million as a project that would supply heating and cooling to customers from two central locations - in the Hanlon Creek Business Park and in downtown - GMHI has had to write down and write off a total of $8.7 million to date given its poor performance.
Pankaj Sardana, the CEO of the city-owned entity that runs district energy, said a lack of customers was its biggest downfall.
"We've been trying and they haven't worked," Sardana said in a presentation to council.
"It's time to clean up and move on," he added.
Monday's meeting saw council sitting as the sole shareholders of Guelph Municipal Holdings Inc., which includes the highly profitable Guelph Hydro.
The issue comes back to council as a governing body June 13 and the debate will likely carry a more political tone, something that scented the air at Monday's presentation.
A detailed report at potential long-term plans for district energy's future is being prepared for a June council meeting. The future could involve shelving district energy.
"We will look at long-term modelling to see if it does have a future or not," Guelph's Chief Administrative Officer Ann Pappert said.
Councillor Dan Gibson called it an "inherited embarrassment" and called for a ""full pause/stop" to any district energy initiatives in the community."
"I'm concerned this might become Guelph's Avro Arrow," said councillor Phil Allt.
Others cautioned that this failure should not be seen as a failure of district energy as a concept, as they are working in other places. Nor should it be confused with the city's overall Community Energy Initiative.
But a failure it is, due primarily to a lack of customers.
The city had hoped to get big hyrdro customers such as Sleeman Brewery, the University of Guelph, Guelph General Hospital and several large condominium complexes and the potential Baker Street redevelopment to connect to its district energy plants. That hasn't happened and it would cost the city millions to expand the project to that scale now, Sardana said.
He said that for the district energy located in the Hanlon Creek Business Park to be successful financially and it would have to service four million square feet of space. It is currently servicing 50,000 square feet.
The downtown location, which heats/cools the Sleeman Centre and nearby River Mill condo complex, performs better.
Through questions form councillors, Sardana said that given the small scale of Guelph's district energy, the environmental benefits are negligible.
Sardana told council that in retrospect $1 million should have been spent as an initial foray into district energy, not the $14 million that was spent.
The $14 million used to set up the two district energy facilities did not come straight out of the city budget - it was funded primarily through the profits of Guelph Hydro. But when pressed by councillor Christine Billings, Sardana did say that the city could have lost revenue in the form of missed dividends from Guelph Hydro as a result.
"Was the $14 million wasted?" asked Billings.
"Yes, it's all been wasted. But we absolutely intended to make these successful businesses, it just didn't pan out that way," Sardana said.
"How many dollars should have been spent?" Billings asked.
"I would have started at about a million then see the potential," Sardana replied.
He did go on to state that Guelph residents did not have to foot the bill for the project or see their hydro rates increase as a result.
"We were very careful to make sure ratepayers weren't harmed by this," Sardana said.
Councillor Karl Wettstein, and others, tried to de-politicize the pessimism surrounding district energy, saying everyone had the best intentions.
"People were working hard to make something good happen," Wettstein said. "It wasn't a political agenda."
Yet Sardana said on several occasions that there was political "suasion" to move ahead with district energy to the level the city did.
Leanne Piper wanted to make sure the public understood that district energy was just one component of the city's community energy initiative.
But Gibson wasn't going to let the air of political interference by previous administrations pass unnoticed.
He said there was "tremendous pressure" to make things happen in district energy from outside political forces.
"The data was flawed and we proceeded anyway," Gibson said.
"In 2012, with no anchor tenant and no short term revenue, what got Envida/GMHI/Guelph Hydro to say yes?" Gibson asked.
Councillor Bob Bell said the city "embarked on a journey" it had little technical knowledge in and used the "wrong financial lens" when assessing their potential.
