St. Catharines council approves Horizon Utilities merger

Hamiltonnews.com
Oct. 20, 2015
By Kevin Werner

St. Catharines has become the latest municipality to approve the merger of Horizon Utilities with three other utilities that will become the second largest electricity distributor in the province.

In a unanimous vote, St. Catharines councillors at their Oct. 20 council meeting gave the complicated merger its blessing which will also provide the city with an extra $1 million in dividends annually, from $3.4 million to $4.4 million.

“This is a great opportunity for the city,” said Mayor Walter Sendzik. “This will provide a significant distribution company in Ontario. This is not a small matter.”

He said St. Catharines city council has “take the (merger) seriously” and found it will mean “better (electricity) rates for residents, while also mitigating higher rates.

The mayor also pointed out the deal will mean more revenue for St. Catharines “in the decades to come.”

“It allows ups to invest in this community,” said Sendzik. “It’s a good news story.”

Councillor Joe Kushner said he saw what happened during the merger of St. Catharines Hydro and Horizon Utilities, and while there are risks to the larger amalgamation, they can be mitigated.

“I have full confidence in staff’s recommendation,” said Kushner. “The merger will be beneficial.”

St. Catharines follows the city of Barrie and Mississauga that have unanimously backed the merger of Horizon Utilities with Enersource, Powerstream, while purchasing Hydro One Brampton. The city of Vaughan earlier this month approved the merger deal.

Hamilton councillors are scheduled to vote on the merger at their Oct. 30 general issues committee meeting.

In 2005 St. Catharines Hydro and Horizon Utilities merged establishing a 79 per cent to 21 per cent ownership split between the two municipalities. Under the new merged company no one municipality will have a majority stake in the company, an issue some Hamilton councillors are concerned about.

Ward 4 councillor Sam Merulla has still indicated he will introduce a motion at the Oct. 30 meeting opposing the merger.

Max Cananzi, chief executive officer of Horizons Utilities has stated that all municipalities need to approve of the merger deal for it to move forward. If all municipalities approve of the merger, it still needs the green light from the Ontario Energy Board.

Cananzi recently told Hamilton councillors the proposed merger will see an average 5.9 per cent lower average utility rate over a 25-year period, save customers on average about $40 per year over 25 years, save $355 million in operating costs within the first 10 years, provide $168 million in capital savings over the decade.

It’s unclear whether customers will save on their electricity bills since rates are determined by the Ontario Electricity Board’s approvals.

“This merger has significant benefits for Hamilton,” said Cananzi.

Hamilton should expect dividends to increase by 29 per cent on average from $13 million annually to $16 million a year.

The total merger price is projected to cost about $97 million. Horizon is expected to pay over $100 million as its share to purchase Hydro One Brampton at a cost of $607 million.

The new merged utility will have 960,000 customers from Horizon’s current 242,000, and employ about 1,400 people. Horizon has 425 people now. The operations will have its corporate headquarters in Mississauga, its operations located in Hamilton on James Street, and service centres in St. Catharines, Barrie, Vaughan, Brampton and Markham.