Mayors extol virtues of merging electrical distributor PowerStream
Yorkregion.com
Nov. 17, 2015
By Amanda Persico
Supporters of a merger involving Markham's local electrical distribution company turned up the temperature on opponents at a press conference Tuesday.
A proposed merger deal between PowerStream and two other power distribution companies - Enersource (Mississauga), Horizon Utilities (St. Catharines and Hamilton) – hinges on Markham’s vote.
For the deal to go ahead, it requires support from each of the shareholder municipalities.
On Tuesday, mayors from Markham, Vaughan and Barrie spoke about the benefits of the merger and of PowerStream’s history during a press conference at the local power distribution company’s truck facility in Markham.
“The customer reigns supreme,” said Mayor Frank Scarpitti. “The benefits for the customer are No. 1, benefits of lower costs and better customer service.”
Benefits for Markham are three-fold: residents, businesses and the city itself, he said.
Residents could save $24 to $30 per year on the distribution portion of their hydro bill.
Industrial businesses in Markham could save about $26,000 on distribution costs and a commercial business can expect about $8,100 a year.
The city could save about $60,000 a year providing electricity to its buildings, which could help offset future property tax increases.
“I hope Markham council listens to the entire community, residents and businesses. Those businesses take risks everyday,” Scarpitti said. “This could give small businesses a stronger foundation.”
Benefits from the deal extend well beyond Markham’s borders, said Vaughan Mayor Maurizio Bevilacqua, chairperson of PowerStream board.
“There are greater benefits, you just have to look outside yourself,” he said. “We (PowerStream) are successful because people looked outside. Now, is not the time to look within, that train has left the station. Parochialism isn’t what we are about.”
Both Vaughan and Barrie voted unanimously in favour of the merger.
The merger is expected to bring billions of dollars in savings across the six municipalities involved - Vaughan, Barrie, St. Catharines, Hamilton, Mississauga and Markham.
Reports, whether from independent consultants or from PowerStream, say synergies that would result in customer savings are achievable, Bevilacqua said.
“Those were quite conservative,” he said. “We are going to do better. We’re not new to this game. We’re leaders in this game.”
The other part of the deal is the purchase of Brampton Hydro One for about $607 million, of which Markham’s investment is about $43 million. The rate of return on the city’s investment close to 8 per cent, officials say.
The merger is not part of the province’s sale of Hydro One assets, Scarpitti said.
“Brampton Hydro has been on the radar for several years,” he said. “The province is not strong-arming us into doing this. This is a unique opportunity that no one else in the GTA has been given.”
When Barrie joined PowerStream more than five years ago it went through the same thing Markham residents are concerned about - going from owner to investor, said Barrie Mayor Jeff Lehman.
“Loss of control, it’s a tough decision,” Lehman said. “The concerns in 2009 weren’t there this time. We went from a majority to a smaller part of a great thing.”
The press conference comes on the heels a special committee meeting in Markham last week where some councillors questioned if the $24 to $30 savings was enough to warrant fewer shares or less control.
But the industry is changing, said PowerStream president and CEO Brian Bentz.
Energy prices are set to rise and consolidation is one way to offset those costs.
He noted PowerStream was the product of a local utility merger between Markham and Vaughan, then Barrie.
“We have to continue to build on what we started,” Bentz said. “This is an opportunity to take it to the next level.
What we did 10 years ago, that was the experiment. And we did make it happen. This is a merging of equals.”
There are more than 60 local power distribution companies in the province, more than twice as many as California, which has a greater population than Canada.
With the merger comes more capital to invest in new technology, such as renewable energy sources, smart grid technology and battery backup, the proponents said.
To get those innovations off the ground, you need scale and resources, Bentz said, which will also allow for specialization.
A final vote is expected during a special Markham council meeting Nov. 19.