Barrie councillors give initial OK to hydro merger

Thebarrieexaminer.com
Sept. 29, 2015
By Bob Bruton

Barrie will plug in to yet another hydro merger.

Seven years after Barrie Hydro joined PowerStream, city council has given initial approval to PowerStream's merger with Enersource and Horizon, and the purchase of Hydro One Brampton Networks.

The new company would be called MergeCo.

During the next 25 years, customers would save $40 a year on average - $25 annually for homeowners - on the distribution portion of their hydro bills, from the merger.

Coun. Michael Prowse, chairman of the city finance committee, said Monday the merger represents a business approach to rising electricity costs.

“It may not be a ton of money, but the price going down is always a good deal,” he said. “The cost avoidance down the road is always a good deal.”

Coun. Arif Khan said Barrie residents would also see an increase in services with MergeCo, because it will be better able to respond to severe weather situations - which seem to be increasing with climate change.

“We will have greater access to more staff and crews,” he said.

Since Barrie Hydro joined PowerStream, it has received $60.2 million in dividends - and used them to pay the city's share of the expanded Royal Victoria Regional Health Centre, for Barrie Molson Centre, Barrie Community Sports Complex and three PowerStream projects.

“That has allowed us to do things without going to our residents and asking for more money,” said Mayor Jeff Lehman.

He acknowledged the new merger will not give Barrie the same rate of return - estimated at $1-$1.5 million annually- but it will be solid and can be used on the distribution portion of hydro bills, which is controlled by the utility.

These savings will be eaten up by larger increases in the price of electricity, in the provincial part of the bill, which is about 75% of the total paid.

Coun. Barry Ward said he is the only councillor left who opposed the PowerStream merger seven years ago, in part because he was concerned about service levels. But PowerStream's service has been good.

“I support this merger,” he said. “It will be good for Barrie residents.”

Barrie owns 20.5% of PowerStream, with Vaughan (45.3%) and Markham (34.2%) owning the remainder. PowerStream is the second-largest municipally owned electrical distribution company in Ontario, with 350,000 customers in 15 municipalities.

Barrie needs to come up with $28.6 million to finance its share of the Hydro One Brampton sale - valued at $607 million - funds that could come from its utility partnerships.

The Ontario government has been encouraging consolidation of the electrical distribution system and, since 1999, the number of companies has dropped to 68 from 300.

Merger talks involving PowerStream, Enersource and Horizon have taken place this past spring and summer.

If approved, PowerStream would own 46% of MergeCo, Enersource 31% and Hoizon 23%. Barrie would hold 9.4% of MergeCo.

Municipal owners would not only be Barrie, Markham and Vaughan, but Mississauga, Hamilton and St. Catharines.

This merger/acquisition requires approval from the boards of all the utility companies involved, the municipalities and the Ontario Energy Board.

The estimated closing date is March 31, 2016.

Council will consider final approval of the new merger at its Oct. 5 meeting.