Guelph Hydro to vote on joining up with 2nd largest municipally-owned utility in North America

TheRecord.com
Oct. 19, 2017
Graeme McNaughton

Guelph Hydro has announced it will be pursuing a merger with the second largest municipally-owned provider of electricity in North America.

The potential merger with Alectra Inc. — which serves nearly 1 million people across the Golden Horseshoe — was announced on Wednesday. This comes after more than a year of public consultations and looking at what made financial sense.

"This is nothing but good news for the City of Guelph," Mayor Cam Guthrie told the Mercury Tribune after the potential merger was announced.

"Not only are we looking at lower rates, not only are we looking at an increased dividend which we can invest more into the community, but we're looking at innovation when it comes to the commitment that Alectra is going to be making about building a green centre — a hub here in town that will also create good jobs."

According to a news release announcing the potential merger, the City of Guelph expects that joining forces with Alectra will see customers avoiding rate increases, and that electricity distribution rates would be lower than they would be if Guelph Hydro had kept going solo.

As part of a potential merger, Alectra has said it intends to build a Green Energy and Technology Centre in the city. Brian Bentz, the president and CEO for Alectra, says the facility — which he described as a "living lab" — will allow for the development of new green energies, as well as adapt to a changing marketplace.

"As we're moving from centralized power to decentralized power systems — where consumers will produce their own energy and store their own energy — we need to make sure these systems work, and that they make sense for consumers, and that they can integrate with the grid," Bentz said.

"There's a lot of learning, a lot of studies, a lot of pilot projects that need to be done, a lot of technology that needs to be understood, data management, how we fund these things; that all needs to be figured out."

Bentz added that if the merger goes through, the current Guelph Hydro headquarters would become the southwest hub for Alectra for at least the next decade. While the hub would see Guelph as its priority, those workers could be called in to assist other parts of Alectra's network should the need arise, such as restoring power after a severe storm.

The merger will come before city council on Dec. 13 for a final vote.

While both parties cited the importance of local workers responding to local calls, it is uncertain if there will be any job losses as a result of a possible merger.

Guthrie said that keeping jobs in Guelph was one of the most common things the city heard back during its consultation process ahead of this announcement, and that information will be relayed to the city's potential new energy partner.

"I am confident that local presence is going to be maintained," he said.

"We've heard it from the public, we've heard it from the employees, and council and myself as mayor have taken that very seriously. And that is going to be relayed through to Alectra."

Bentz says that should there be any job cuts, it will not be done via layoffs.

"We have lots of experience in post-merger integration. We've done it several times," he said.

"We need employees engaged and committed to the organization. If there is any … changes in employment, it's done through attrition, early retirement or voluntary severance packages that people choose to take."

Guelph Hydro currently employs about 130 people.

Over the next two months, the City of Guelph will be conducting more public consultations ahead of a vote by council in December on the merger.

Derrick Thomson, the city's chief administrative officer and the lead on the merger file, says that residents will be able to chime in on the process both online and in person.

"We have Energize Tomorrow; that is really the go-to place to get information and to be able to ask questions," he said, referring to the website the City of Guelph set up during the initial service review stage for Guelph Hydro to gain public feedback.

"We will be setting up a round of town halls and community events where people can come out. We did a number of in-person town halls (prior to the merger announcement), and we will continue to do that because it is so important to us."

To date, the Guelph Hydro asset review — which led to this potential merger — has cost $810,000 for Guelph Muncipal Holdings Inc. (GMHI), the holding company which owns and operates Guelph Hydro on behalf of the city. GMHI is expected to spend another $1.55 million between now and the finalization of the merger process, bringing total costs to about $2.36 million. The funds come from the dividend from Guelph Hydro paid out to the city every year.

Thomson says that pending approval by council, the merger would likely take 11 to 12 months to go through, pending approval from the Ontario Energy Board.

Alectra is no stranger to the Ontario Energy Board, having had the merger that resulted in the company's creation approved in late 2016. Alectra was created following the merger of Mississauga's Enersource; Markham, Barrie and Vaughan's PowerStream; and Hamilton and St. Catharines' Horizon. That merger was done in order to purchase Hydro One Brampton from the Ontario government, which brought the province more than $600 million in revenue.

Upon the completion of the merger, Alectra became North America's second largest municipally-owned utility company, behind only the Los Angeles Department of Water and Power.