A proposed merger between Horizon Utilities Corporation and Guelph Hydro Electric Systems Inc. is getting closer.
The boards of directors of, Hamilton Utilities Corporation, St. Catharines Hydro Inc., and Guelph Hydro Inc., are recommending the merger to their respective owners, the cities of Hamilton, St. Catharines, and Guelph.
Guelph Hydro Electric Systems chairman Paul Truex said in an interview he wants to make it clear to people that the proposal is a merger, and not a sale.
The companies have been discussing the issue of a merger for over a year, and presented an initial report to Guelph council in February. That special council meeting included a packed gallery that included a number of employees of Guelph Hydro.
A memorandum of understanding between the two local distribution companies was announced last June.
Since then, board members and management of both organizations have evaluated the proposed transaction, and established a business case for the proposed merger. The three boards will recommend their municipalities approve the transaction, which will continue the municipal ownership of the business.
All three city councils plus the Ontario Energy Board, the industry regulator, must then approve the merger before it can take place.
The proposal will create a single distribution company that provides service to approximately 280,000 business and residential customers in the cities of Guelph, St. Catharines, and Hamilton.
“There is a tremendous opportunity here to create a more efficient operation,” said Truex.
“We will be able to create economies of scale that maintain competitive local distribution rates, and help to offset the impact of any future provincial rate increases.
“Our common commitment to sustainable and vibrant communities, our valued employees, and our reliability and customer service provide a strong foundation on which to move forward,” he said.
Robert Dolan, Horizon Utilities board chairman and co-chairman of the merger steering committee, noted that continued consolidation of such utilities in Ontario is inevitable.
“It is being driven by the economic realities of the electricity industry and by every utility’s desire to reduce the impact of future rate increases, force down operating costs, and maintain the highest possible standard of service,” he said.
Horizon has already approached Hydro One about purchasing its Erin delivery section.
Dolan said, “We’re proud that Horizon and Guelph lead the way in this process. As community focused organizations, we continue to support a successful template for continued local distribution companies consolidation that we believe will encourage participation by future partners.”
The proposal in Erin noted that a merger with Guelph means lower prices for Erin customers.
Truex said there is a great deal of consultation with the public before there will even be a vote on the merger proposal in Guelph. He said city council will receive information about the proposal at its meeting on May 26, and the earliest date set for a vote is Aug. 21.
He added that in the meantime, Guelph Hydro will be holding a public information meeting in between those two dates so citizens can ask questions and get any information they want.
“There’s a lot of opportunity for public discussion,” Truex said.
He added if the merger does go through, Guelph would own 25% of Horizon, and it would have three representatives sitting on the Horizon board of directors, which has 13 members.
He added that after five years, Guelph’s representation would not change, but the board’s numbers would be reduced to 11.
Those public information sessions on the proposed merger will be held in all three communities in advance of those municipal councils’ consideration of the merger.