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Market Squared: A sale by any other name?

Guelph Hydro has announced a merger with Alectra, but is this the marriage of mom and pop electrical shops that was promised?

A mysterious summons to City Hall, meeting room #112 dressed up like a kind of press briefing room, a dozen people I had never seen before smartly dressed in nice suits… This wasn’t just breaking news, it was classy all-star breaking news! 

As you may have read here or elsewhere, the City of Guelph and Guelph Hydro announced Wednesday that they have signed a memoranda of understanding with Alectra Utilities to begin formal merger negotiations. If all goes well, in a couple of years Guelph will join four other utilities and 13 other communities under the Alectra umbrella, with the Royal City home to Alectra’s new southwestern Ontario hub, and a Green energy research hub. 

Sounds great, right? It may be, and certainly the tenor of the mayor and senior staff at the press event was excited and pleased. Considering the announcement afterward though, I can’t help but think that some citizens, and likely some members of council, are going to have a problem with it. 

First, I recall that there was some concern around the horseshoe at a meeting earlier this year about the “Guelph” in Guelph Hydro getting lost in a merger. Some on council proposed that if Guelph were to enter a merger, then we should have some kind of controlling stake in the new entity, enough to veto any direction the new utility might take. 

Will such a thing be possible with Alectra? To answer that question, consider that Alectra covers much of the Greater Toronto Area and beyond including York Region, Brampton and Mississauga, Simcoe County, Barrie, and Hamilton. For those of you keeping track at home, that’s a little over 3 million people, so what hope is there for Guelph, among all that, to hold some pivotal swing vote that could kill any decision we don’t like? 

But suppose we’re fine with that. Suppose that we take at face value, as was said at the announcement, that the mission and goals of Guelph Hydro and Alectra align. I can’t help but wonder if this is still the idea of the small, friendly merger that was talked about in public meetings. 

Indeed, Alectra is a monster as compared to Guelph Hydro. That’s not a negative condonation necessarily. Indeed pop culture has taught us that there are good monsters, and even Godzilla, king of the monsters, sometimes acts in the role of the hero. But in the assertion that the City of Guelph was making sure that a potential merger partner has a local mindset, a utility that covers an extended area from north of Toronto to Lake Simcoe and all the way back south to Hamilton is probably no one’s idea of “local”. 

The perception I think many people are going to have is that there’s no difference between Guelph Hydro merging with Alectra, and if Alectra had just bought Guelph Hydro outright. And if there was one thing everyone who spoke at a council meeting earlier this year could agree on, it’s that when it came to selling Hydro, there was no sale to be had. Talking council out of that direction seemed to be the only consideration. 

So how will people react to the merger? That’s the question, and the City has promised that they will do a lot of public input before the final vote on the merger comes before council on Dec. 13. Here’s the rub though: the last few meetings on this subject have almost entirely been behind closed doors. 

While talking to Mayor Cam Guthrie and Chief Administrative Office Derrick Thomson after Wednesday’s presentation, I asked both men about meetings behind closed doors and they promised that public input will factor heavily before a final decision is made. “Openness” and “transparency” were both words that were used by the head of city council and the man leading the merger negotiations. 

Now I have no reason to doubt the sincerity of either Guthrie or Thomson, I think they both intend to be open and transparent as the process moves on, but what about before hand. 

I sat in an empty council chambers at a Sept. 13 meeting about the Strategies and Options Committee for three hours as council met in a closed session. 

The topic was “Update on Business Cases for Potential Mergers”, which had to be held behind closed doors because it was “subject to advice that is subject to solicitor-client privilege.” When council returned, all that was on the public record is that there was an “extensive back and forth with the City’s legal team in terms of more information required about potential mergers.” 

I might have let that slide had it not been for a stray line in the press materials for the event. That the City had as many as 14 potential partners that were interested in a merger with Guelph Hydro. 

That over a dozen different local distribution companies would be interested in joining with Guelph Hydro should be unsurprising. The reputation of our LDC is terms of responsiveness and professionalism is second-to-none, and that’s not a mere boast. 

To me, the question isn’t what does Alectra see in Guelph Hydro, it’s what the City of Guelph didn’t see in the 13 other LDCs that made them decide to merge with Alectra. Is that information going to be released by the City? Shouldn’t we, the customers of Guelph Hydro, essentially the shareholders of the company, be made aware of the complete picture? 

Again, that’s not to accuse council of covering anything up, but I think council remains quick to classify something as necessitating a closed meeting out of the interest of not sticking a litigious foot in their mouths. As readers of this space will no doubt remember, the overuse of the closed meeting provision is a windmill I’ve been tilting at, and in this case I tilt again. 

Why? People are edgy about messing with something as important as hydro. It’s not something you can do without, and it’s not something you can drive across town to another LDC to get when Hydro’s service isn’t up to snuff or they charge you too much. 

In essence, the concern over sale was a concern about a bigger utility coming into town and telling the people here what they want as opposed to the reverse, and I think to a lot of people, merging with Alectra looks like “sale” by a different name. A bigger utility is coming into Guelph, it’s just asking our permission first before it eats us. 

For council and staff, they have a big job ahead of them to convince Hydro’s customers that this is the best bet for them.