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Market Squared: Who’s got the power?

Council debated the merits of a merger, but they properly tell us why we're having the debate?

Andy Van Hellemond doesn’t say much in city council meetings, but what is it they say about the quiet ones?

Van Hellemond was the voice of, well, I’m not sure if it was reason, but there was something about the special meeting of city council on Tuesday night that you couldn’t put your finger on, a feeling that was in the air that didn’t have a name, so you weren’t really sure what it was. Councillor Van Hellemond needed understanding, and I realized so did many of us. 

Technically, the meeting wasn't a council meeting, but a gathering of the shareholder of Guelph Municipal Holdings Inc, the holding company under which Guelph Hydro is managed. As you may know, council has been exploring future options for Guelph Hydro, although really now there are only two: go it alone, or look for another local distribution company (LDC) to merge with. 

But what’s the urgent urgency? Van Hellemond’s directness was a defibrillator for the meeting that for a time seemed to be walking over much of the same ground as a previous meeting on the subject back in February. So what’s the deal? “I don’t have a problem with hydro,” Van Hellemond said. “They’ve met my expectations every day of the week and for 45 years.” 

Van Hellemond seemed to reveal an elephant in the room, we felt the weight of it, but his statement seemed to remove the invisibility cloak it was wearing, and some of the other councillors admitted that they could see it too. They, like Van Hellemond, had heard from constituents that were confused about the intentions of these meetings. They liked Guelph Hydro, they like the work they do, they liked that’s it locally owned, so we’re doing this why?

There’s a wonkish answer, but first let’s address the anxiety. Hydro prices have been going up, and if there’s a sword that the provincial Liberals will fall on this election time next year, hydro will be it. On top of that, it’s hard to find someone not already in the Liberal caucus that will happily endorse the idea of partially privatizing Ontario Hydro no matter what the profits will be earmarked to do. 

That, more than any practical reason, was probably why council took selling Guelph Hydro off the table at its earliest convenience. Forget the fact that this is as much a thought exercise as it is trying to determine a future course for Hydro, nine delegates took part in February’s meeting, one spoke in favour of sale or merger, but eight came to say “You can’t touch this.” The vote to continue exploring sale failed 5-8. 

By comparison no delegates came out for Tuesday’s meeting, which seemed to indicate that with sale off of the table, people by and large feel secure that Guelph Hydro will stay anchored locally, even if its area of coverage expands by merging with another utility. Still, some are asking the question, if it ain’t broke, why fix it? 

It’s the eternal question when it comes to good stewardship: Look into the future and what do you see? Is what’s working today good for tomorrow, or do we have to make changes now to weather coming storms? Those managing Hydro, and those exploring its future, see a storm coming. Whether that’s rain, sleet, or snow clouds on the horizon is another matter altogether. 

The crux of the matter is what the function of an electricity utility will be in a world where more and more people are self-generating their own electricity in the form of solar panels? 

There’s also the unknown unknowns. What technology might be coming down the pipe that will turn LDCs and the business of generating and distributing electricity upside down? We’ve had Amazon, the world’s biggest retailer with no stores. Uber, the world’s largest taxi service that owns no taxis. And Netflix, which has pretty much put every video store on the planet out of business. 

Now it’s fairly unlikely that something will come along to make every hydro utility have a going out of business sale, and as mentioned in the meeting, there’s the chance that Guelph Hydro will become more centric to the needs of its customers. Dan Gibson, Van Hellemond’s neighbour on the horseshoe, noted that no one will be charging their electric car through a plug in a garage powered by a solar panel. At least in the short term. 

Let’s be clear, these are big questions. It’s a bit like trying to build a town square with only some idea of what it’s going to look like, as if you only have plans for one half of street. That might be okay if you’re playing SIMS, but this is real life, and basically everything involved in our modern world kind of plugs into a wall. It gives you some idea of how big this issue. 

That’s why its a shame that the matter sort of came down to the pure capital perspective of who’s buying what, who’s selling what, and who’s merging with who. Yes, it’s important to know who’s going to own Guelph Hydro, but the problems and opportunities will persist no matter who owns the utility. 

On that subject, it appears that there are some possible merger partners, but that information is being held confidential for the time being. It seemed that Councillor Christine Billings was not impressed with the candidates, and she said as much before casting her vote in the negative about continuing on with the merger research. Van Hellemond and Bob Bell also voted no.

It remains to be seen whether or not there’s going to be an actual merger, and while that was the focus of this week’s meeting, it was clear there was a missing piece still, what’s the City going to do with Guelph Hydro if they don’t merge with anyone? The hope is that a bigger utility will have the capital base to confront whatever the future brings, but what can Guelph Hydro do on its own? 

It seems that with this issue, as with many issues at City Hall, there’s a communication problem. These discussions seemed billed as all about who should own Guelph Hydro, but this perplexed people because the default answer for most is we should, Guelphites, and that’s the way it we like it. 

Be that as it may, there’s a great big broader discussion about what the future of electric power looks like. It’s the practical end to all the climate change talk because if we’re go to change the way we get power then someone’s going to have to make sure it gets to us safely, securely, and consistently. The people have spoken though, they want Guelph Hydro in charge.