Hamilton mayor will get higher compensation on merged utility board

HamiltonNews.com
Nov. 27, 2016
By Kevin Werner  

The board of directors of a soon-to-be united utility could be earning more than $35,000 a year once the Ontario Energy Board approves the merger.

Hamilton Community News has learned that MergeCo’s board of directors’ compensation will start at about $25,000, but then each board member will receive $2,500 for attending a meeting. The compensation does not include per diems.

It is expected the board will meet four times a year, earning board members about $10,000 on top of their $25,000 compensation. There will be 13 board members for the new utility that will be merged with Horizon Utilities, Enersource, PowerStream, and the acquisition of Hydro One Brampton.

Mayor Fred Eisenberger, who will be one of two Hamilton representatives on the new board of directors, said the compensation reflects the new duties of the merged utility.

“There is a higher compensation amount for the board of directors based on expanded responsibilities,” he said.

But with the four utilities eliminating their boards, there will be a savings in compensation, he said, of about $400,000.

“The overall compensation number for all merged entities is reduced,” he said.

Enersource will have four representatives on the board, reflecting each community’s ownership in the new utility, followed by the City of Vaughan with three representatives, Markham and Hamilton will have two each, and Barrie and St. Catharines will have one each. The directors are not full-time positions.

“I’ve seen the full report on how they make the (compensation) comparisons and I’m satisfied with how they’ve come to a number that reflects the level of responsibility and quality of the independent business folks that need to be attracted to the board,” said Eisenberger.

Hamilton’s other representative on the proposed MergeCo board is Paul Benson, chair of the Hamilton Utilities Corp.

There are currently 10 directors for HUC, and Enersource, while PowerStream has a 13-member board for a total of 33 directors.

About half of the new MergeCo board of directors will be composed of mayors, including Bonne Crombie, the mayor of Mississauga, who is a director of Enersource’s board, and the Mayor of Vaughan Maurizo Bevilacqua, who is on the PowerStream board.

Eisenberger said the compensation had to be enough to attract people to take on the responsibility of being on the board.

“(The compensation) is lower than what you would find in the private sector, but still an attempt to make it attractive enough to get quality people to participate in this large and very important merged entity,” he said.

Horizon Utilities Corporation representatives recently held an in camera meeting with city councillors, who are also HUC shareholders, to provide an update on the merged utility corporation. A portion of the in camera presentation included the board of directors’ compensation, which prompted some pointed questions by councillors to Horizon officials.

Politicians were angered that at a time where Hamilton residents are experiencing escalating hydro rates, some board members will be receiving triple the compensation they had received while members of their own utility boards.

Eric Fagan, vice-president of corporate communications for PowerStream Inc. stated in an email that the MergeCo representatives are currently discussing the compensation of the board of directors with its shareholders.

“The MergeCo approach to setting compensation considers appropriate benchmarking with comparable organization through an independent third party,” he stated.

The Ontario Energy Board is expected to approve the merger of the four utilities some time in December. If that happens, then the new merged company will come into existence in January or February 2017.

The as-yet-unnamed company will be the second largest distributor of electricity in Ontario serving about 960,000 customers from St. Catharines, Peel and York regions to Barrie and Markham. 

Horizon’s president and chief executive officer, Max Cananzi, recently told Hamilton councillors during the public portion of the merger presentation that a year-long study has confirmed the benefits of uniting all four utilities. He said there will be about a 5.9 per cent average annual rate reduction and $40 savings per household each year for the next 25 years.

There will also be a $355 million operation cost savings and $168 million capital savings in the first decade.

For Horizon, there will be 270 positions eliminated, but Cananzi said 130 of them are not filled. He said there will be no layoffs to the organization.

Hamilton council approved the merger in October 2015 with a 10-4 vote.