Markham poised to vote on PowerStream merger

Yorkregion.com
Nov. 10, 2015
By Amanda Persico

The voluntary merger of municipally controlled electrical distribution companies being urged by the province is nearing its final stage with Markham set to consider the merger of PowerStream with other distribution companies in the Greater Toronto and Hamilton area.

The move would see PowerStream - owned by Markham, Vaughan and Barrie - merge with Horizon Utilties Corp. (Hamilton and St. Catharines) and Enersource (Mississauga). 

Recently, new provincial policies have made it easier for electric utility companies to consolidate, including temporarily putting a moratorium on a multimillion-dollar transfer tax.

The proposed merger is seen as a catalyst for other similar mergers across the province, provincial officials have stated.

A provincial report on government assets suggests mergers would promote efficiency while also "unlocking the value of assets", which has been government language for at least partial privatization as was seen with the recent sale of shares in Hydro One.

Through Markham Enterprises Corp., the city has a 34 per cent stake in PowerStream.

The remainder is split between Barrie with about 21 per cent and Vaughan with about 45 per cent.

Markham is hosting a special committee meeting Nov. 11 at 7 p.m. to review the final details of the proposed merger and the purchase of Hydro One Brampton.

A final decision is expected at a special council meeting Nov. 19.

The plan would require the purchase of Brampton Hydro for about $607 million, with Markham having to invest between $38 million and $43 million.

City staff are looking at different funding options, including borrowing and sale of about 10 per cent of the city’s shares of PowerStream.

According to a city report, Markham residents can expect to see a reduction of about $24 to $30 per year in their utility bills.

The city could also expect to save about $60,000 on electricity costs from city own facilities such as community centres and libraries each year.

Together with Vaughan and Barrie, Markham as a PowerStream shareholder retained independent consultants to review the deal.

Through a merger, Markham could see its ownership shares decrease from the current 34 per cent to about 16 per cent.

Under the new merger plan, Mississauga would own 31 per cent, Vaughan 21 per cent, Hamilton 18 per cent, Markham 16 per cent, Barrie 9 per cent and St. Catharine’s 5 per cent.

But the original PowerStream trio - Vaughan, Markham and Barrie - would hold about 46 per cent of the new local power distribution company.

For the deal to go ahead, the Ontario Energy Board needs consent from each municipality.

Both Barrie and Vaughan have approved the merger, along with Mississauga and Hamilton.

The deal hinges on support from Markham and St. Catharines.

Once final approvals are received from each municipality, the application goes before the Ontario Energy Board for approval with a target closing date in March 2016.