Exploring options for Guelph Hydro
Guelph’s Strategies and Options Committee is exploring opportunities to ensure we get the most value from Guelph’s energy assets—to benefit our city, the community, and Guelph Hydro customers.
Provincial policies are changing. New technologies are emerging. We want to make sure Guelph Hydro is prepared for the future.
Guelph Hydro service
There will be no changes to your electricity service at this stage
There will be no changes to rates at this stage
Jobs at Guelph Hydro
There will be no impact on jobs at this stage
Technology is changing
Advances in energy technology are making it harder for small and mid-sized utilities like Guelph Hydro to offer competitive electricity prices and services. Typically, larger utilities are in a better position to improve local services and infrastructure because they spread the cost of these investments over more customers.
Customers across Ontario expect modern, affordable electricity services like:
- electric vehicle charging stations
- small, local, renewable generation
- home automation
- smart-grid technology
- advanced energy management systems
Utilities are changing too
With utilities across Ontario consolidating their businesses, now is the time to consider the future of Guelph Hydro. We’re exploring how potential mergers with one or more publicly-owned utilities would compare to maintaining full ownership of Guelph Hydro.
Based on what we’ve seen in other communities, a merger with other public utility companies could:
- reduce duplication
- improve efficiency
- enhance electricity services
- help manage costs
What we know so far
City Council has already decided not to sell Guelph Hydro, or buy other utility companies.
We had preliminary discussions with 14 publicly-owned electricity utilities in the area. Some seem like a better fit than others at this point, but the number of potential merger partners could change as we learn more about each company.
Potential partners deserve an opportunity to consult with their customers, employees, shareholders and political leaders before making public announcements about potential changes.
If we find a suitable partner(s), and if City Council decides to enter into formal merger negotiations, we will share more specific information in the fall.
Let’s talk about local control
While collecting input during the first phase of the process, we heard local control was important to the community and City Council.
We’re using community-supported decision-making criteria to assess potential merger partners. We’re also considering each company’s share of ownership, shareholder arrangements, governance, and core values.
Control could mean owning the majority of shares in the company. In a merger with multiple partners, control could also mean no party owns more than 50 percent of the company. A shareholders’ agreement would establish the rights and obligations of each partner, and explain how decisions are made.
Local electricity rates and services
If City Council decides to pursue a merger, we expect to be able to announce more specific financial and operational details in late 2017/early 2018.
When you pay your Guelph Hydro bill, 80 percent of the money is used to pay electricity generators, transmitters, and provincial government agencies. These charges are related to the amount of electricity you use, and Guelph Hydro has limited control over them.
Guelph Hydro keeps 20 percent of your payment to cover the cost of distributing electricity here in our community. Guelph Hydro manages these distribution charges carefully, and proposed changes to distribution charges must be approved by the Ontario Energy Board.
Ontario Energy Board requirements
Any plan to buy, sell or merge electricity utility assets must be approved by the Ontario Energy Board. Any plan to buy sell or merge electricity utility assets must be approved by the Ontario Energy Board. That means the proposal must show it will not have an adverse effect on ratepayers based on the Board’s statutory objectives:
- To protect the interests of consumers with respect to prices and the adequacy, reliability, and quality of electricity service.
- To promote economic efficiency and cost effectiveness in the generation, transmission, distribution, sale and demand management of electricity and to facilitate the maintenance of a financially viable electricity industry.
- To promote electricity conservation and demand management in a manner consistent with the policies of the Government of Ontario, including having regard to the consumer’s economic circumstances.
- To facilitate the implementation of a smart grid in Ontario.
- To promote the use and generation of electricity from renewable energy sources in a manner consistent with the policies of the Government of Ontario, including the timely expansion or reinforcement of transmission systems and distribution systems to accommodate the connection of renewable energy generation facilities.
Learn more about the Ontario Energy Board No Harm Test in the Handbook to Electricity Distributor and Transmitter Consolidations
Guelph’s decision-making criteria
In addition to meeting to board’s requirements, we’re considering what’s most important for Guelph Hydro customers and the community.
The Strategies and Options Committee will make its recommendation to Guelph City Council who has the authority to make decisions about the future of Guelph Hydro.
Explore options: buy, sell, merge or maintain full ownership
Begin community engagement
Present findings Guelph City Council
March to Fall 2017
Scan industry for potential merger partners: publicly-owned utility companies
Engage merger candidates
Develop preliminary business cases and financial analyses
Outline impact on shareholders ratepayers
Discuss governance models
Compare to maintaining full ownership
Make recommendation to City Council
Fall to winter
If Council decides to pursue a merger:
Enter into memorandum of understanding
Announce the parties involved
Begin exclusive negotiations
Continue community engagement
Conduct financial, legal, operational and regulatory due diligence
Develop merger and shareholder agreements
Finalize rate impact
Make recommendation to City Council
Winter 2017 to 2018
If City Council approves the transaction:
Submit a Merger, Acquisition, Amalgamation and Divestiture Application to the Ontario Energy Board
Develop implementation plan
Establish leadership and governance
The process is complete upon Ontario Energy Board approval