Ontario Energy Board approves Horizon Utilities merger proposal

HamiltonNews.com
Jan. 10, 2017
Kevin Werner

Horizon Utilities, which services customers in Hamilton and St. Catharines, will become part of the largest municipally-owned local distribution company in Ontario.

The Ontario Energy Board approved the merger Dec. 8 of that involves Horizon Utilities, PowerStream, and Enersource, and for the incorporated merged company to purchase Hydro One Brampton for $607 million.

The merger was the first application to the OEB that involved multiple LCDs. Once the new merged company is established, expected either in January or February 2017, it will acquire Hydro One Brampton in the largest electricity distributor acquisition to date in the province.

The OEB, referring to its revised handbook as a guideline for the merger established in January 2016, stated in its 34-page decision that the merger “can reasonably be expected to result in cost savings and operational efficiencies.”

A number of intervenors did take issue with the merger, arguing the applicants’ savings projections were not guaranteed and that ratepayers in Brampton would be hit with higher electricity rates because they have the lowest rate among the merged customers.

The Consumers Council of Canada argued the applicants’ financial proposals are “highly questionable,” while the School Energy Coalition stated that the “status quo increases” for rates forecasted by the applicant are “overstated.”

But the OEB stated the applicants’ evidence that the transaction “can be expected to result in long term benefits to customers.”

The OEB also stated that “customers will not be harmed by the proposed transaction in the short term, and will, in fact be better off and will likely benefit from the enduring benefits of scale in the long term.”

Hamilton council, as a Horizon Utilities’ shareholder, approved the merger in a contentious 10-4 vote in October 2015.

The OEB review of the application, made in April 1016, included five days of oral hearings and written arguments from intervenors.

The unnamed merged company will have 960,000 customers stretching from Penetanguishene to St. Catharines, with a total rate base of about $2.5 billion.

Horizon officials confirmed to Hamilton politicians in November there will be “significant” benefits to customers and the city. It will include a six per cent cut in hydro rates over the next 25 years resulting in savings of about $40 annually for the average homeowner, an increase in dividends to Hamilton from $13 million to about $16.8 million and after savings of about $51 million annually over 10 years.

“These reductions are reaffirmed,” said Max Cananzi, president of Horizon Utilities Corporation. “They are right on track.”

The new president of the merged corporation is Brian Bentz, president of PowerStream, while Cananzi will become president of the merged company’s local distribution based in Hamilton. The headquarters of the new company will be based in Mississauga. Horizon’s John Street facility will be kept open.

Under the new merged company Enersource will have 31 per cent controlling interest, while Vaughan will have 20 per cent, Hamilton 18 per cent, Markham 15.7 per cent, Barrie 9.4 per cent and St. Catharines will have 4.9 per cent.

Horizon officials said in November that a new name for the merged company has been selected and will be released when the company is incorporated.

Paul Benson, chair of HUC, said tests have already been done to select the name. He said it will be “unique, fresh and green.”