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Guelph-Horizon Hydro merger debate

Tonight, Guelph City Council is holding a meeting mostly to discuss a proposed merger between Guelph Hydro and Horizon Hydro, the company formed out of the merger of Hamilton and St. Catharines Hydros. Below is my statement as a delegation to council this evening on the topic.

Madam mayor, members of council,

I come to you as a citizen concerned about some aspects of the proposed Hydro merger. Any time someone tries to sell me an amazing deal that expires if I don't act now, I get just a bit wary. So I have a few questions. Why the rush? Are the reasons for the rush substantiated? Is bigger always better? And what, exactly, are these economies of scale we keep hearing about?

There is an inherent contradiction in all we are being told. On the one hand, Hydro's board tells us that if we don't do this merger, we risk being merged against our wishes at a later date in less favourable circumstances. On the other hand, we are told that this merger needs to be approved before the tax holiday window slams shut in October. In between is the statement that the Ontario government is looking to reduce the number of local distribution companies to around 10 from the hundred-odd we have now, a claim for which there is not a shred of evidence.

If councillor Wetstein is right that Guelph Hydro will be merged eventually, and it is best to do it while we are in a position of strength, and if the Ontario government is serious about wanting mergers, then at some point, if we have a truly excellent merger proposition, and a sense as a community that it is the right thing to do, we can take it to the Ontario government and ask for this tax exemption at that time. If they are not willing to give it to us, then we can safely assume that the province is not, in fact, serious about promoting the merger of utilities. It is worth pointing out that Guelph Hydro achieved this position of strength on its own, not as part of any MegaHydro.

If councillor Laidlaw is right, and small local utilities are the way of the future, then we have to ask ourselves what we accomplish by even considering merging. Is it a business case or is it a community case? Is this proposal to help us save a few dollars in the short term, or is it to help us build a better community?

The BDR consultants last week asked us to give different values weights, and also suggested that we have to ask ourselves if we consider Guelph Hydro a business that can be sold or an essential service like our police or fire services. Those two points are inextricably connected. It goes without saying that both our police and fire services are inherently dependent on Guelph Hydro, as is every other aspect of our community.

What are these economies of scale we keep hearing about that a merged -- but not interconnected -- utility would provide? Will we need fewer power lines, transformers, and transfer stations, or will we get a bulk rate discount from Guelph Utility Pole? Surely the 30 or so employees that we would cut between the two utilities will not add up to the much touted and unproven 20% savings we are told of over the next few years. If they do, I wish I had one of those evidently very lucrative jobs.

While we are looking at numbers, what is the line between transactions that require shareholder approval, and ones that do not? Why is this threshold not public?

I believe that all of us have more questions than answers. Have we considered some kind of strategic partnership, something that we can get out of? Why would we merge with another city's utility when that city - Hamilton - would retain a 59% stake, able to buy and merge with as many small companies as it pleases without any input or veto from Guelph? I recommend we take BDR's advice and assess values to each consideration ourselves. We should value our utility as an essential service, not as a business, and consider it in terms of our community first.

Thank you for your continued leadership.

Posted at 18:00 on July 21, 2008

This entry has been archived. Comments can no longer be posted.

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thehighwayman writes at Mon Jul 21 22:34:29 EDT 2008...

David ...

You are right to question the amalgamation of Guelph Hydro into Horizon Hydro!

Believe me, as a resident of Hamilton, you do not want anything to do with anything that involves Hamilton!

If there is a way to screw things up, they find it -- and use it!

wdm


Lisa (pottersfield@rogers.com) writes at Wed Jul 23 00:06:26 EDT 2008...

I agree David. Building a better community should be our focus. We have a solid Community Energy Plan. We have a strong sense of community. We need to keep Guelph Hydro in Guelph. BDR said that a utility of Guelph's size could compete quite successfully in the market. The biggest problems that Guelph Hydro are having right now are due to staff shortages due to other utilities cherry picking the best employees. They've left because Paul Truex made them believe that this merger was inevitable. It's sad but not too late to fix if council votes no to the merger.

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