Guelph Hydro directors recommend merger with Horizon group

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.