Horizon merger receives approval from all shareholders
Close vote in Markham clears way for deal to go to Ontario Energy Board

niagarathisweek.com
Nov. 25, 2015
By Scott Rosts

The proposed Horizon Utilities merger has received approval from all shareholders.

Last Friday City of Markham became the final shareholder to approve the proposal to merge municipal electricity utilities Enersource, Horizon Utilities and PowerStream, and jointly acquire Hydro One Brampton. The multimillion-dollar deal, if approved by the Ontario Energy Board, would see the creation of the province’s second largest electrical distribution company, serving nearly a million customers in six municipalities.

St. Catharines is one of the shareholders, having given approval to the deal in October. The others involved in the transaction include the municipalities of Barrie, Hamilton, Markham, Mississauga and Vaughan and Borealis, a division of the Ontario Municipal Employees Retirement System and a shareholder of Enersource.

Once the agreements are finalized, details of the transaction will be forwarded to the Ontario Energy Board for regulatory approval, a process that is expected to take several months.

"The merger is a win-win for customers and shareholders," said merger spokesman John Crean. "By generating cost savings through significant economies of scale, the merger will reduce the rising cost of electricity for customers and improve returns for municipal shareholders - monies that can be invested back into communities. By maintaining competitive local distribution rates, the communities also remain attractive to new investment, which benefits all municipal taxpayers and electricity ratepayers."

Benefits for the City of St. Catharines, according to Horizon Utilities, include an extra $1 million in dividends to the City on an annual basis for the next 24 years, from $3.4 million to $4.4 million. Horizon Utilities president and CEO Max Cananzi told city councillors customers can also expect, on average, to see a reduction in the distribution charges on their bills of about $40 per year – about $1.9 million annually across the utility’s customer base in St. Catharines over the same period as compared to the status quo.

The merged utility would also maintain a service centre in St. Catharines as part of a commitment to maintain service response levels and response time, and there is the potential to see as many as 15 more jobs at the utility’s St. Catharines call centre. Currently there are about 30 employees at the call centre, according to Cananzi.

“This is a win-win for the municipalities involved, as well as electricity ratepayers in each of the communities. It will result in the creation of an improved company that is better positioned to serve customers, an increase in dividends for municipal shareholders and a reduction in local electricity distribution rates. I am pleased that each of the municipalities involved was able to recognize these benefits, and the value that this new company will bring to electricity consumers,” said Energy Minister Bob Chiarelli in a statement Friday.

“We will now proceed towards completion of the merger agreement and the associated application to the Ontario Energy Board for the creation of the new company.”

The approved merger now requires approval from the Ontario Energy Board. The estimated closing date is March 31, 2016.

“This is a great opportunity for the city,” St. Catharines Mayor Walter Sendzik said last month, noting it will not only mean rate stabilization for residents and savings for commercial customers, but will also “help relieve the tax burden” for the community with the additional revenue “in the decades to come.”

“It allows us to invest in this community,” added Sendzik.