City council has decided to look into merging Guelph Hydro with other publically-owned utilities but will not consider selling it.
A possible merger of the city-owned utility will now be looked at as an option to maintaining complete ownership.
The decision came at a special four and a half hour meeting Wednesday.
Council, sitting as the shareholder of Guelph Municipal Holdings Inc., voted 8-5 against exploring the sale option and 10-
The city’s Strategies and Options Committee that was formed to explore various options had recommended exploring both a sale and a merger.
That committee will now move into the next stage and report back to council mid-2017 with its next recommendations.
A total of 11 delegates spoke at Wednesday's meeting, all against selling Guelph Hydro.The majority of public response during initial consultation was also against a sale.
Mayor Cam Guthrie supported at keeping both the sale and options open moving forward.
While the Mayor agreed with many of the concerns expressed by council and the public Wednesday, he felt that the SOC committee should be allowed to “keep the door open and cast the net wide” in what it explored in the next stage.
The SOC committee told council that the city needs “to be ahead of the curve” in making the best decision moving forward.
“There’s no clear or easy answer,” city Deputy CAO Scott Stewart told council, saying that is why further exploration is necessary.
The meeting heard that the process has already cost the city $100,000 so far and will cost a lot more at the next stage.
SOC committee member Bob Bell (not the Ward 1 councillor) told council that while Guelph Hydro is “certainly a well-run utility” and that while the committee heard from the public several times that “if it ain’t broke, why fix it,” it’s important to be forward thinking.
“It’s all about being proactive,” committee member
“Under no condition do I want to lose control of our electric utility,” said Coun. Bob Bell, saying he was against a sale, but “lukewarm” to a merger if the city could maintain at least a 50 per cent share of the resulting entity and hold veto power over any subsequent mergers.
Coun. Mike Salisbury said he had a “nagging concern that there is an assumption that the solution we are chasing is better than the status quo.”
Maintaining the status quo could potentially lead to higher electricity rates, loss of equity, an inability to provide the latest technologies and inability to invest in major upgrades, council was told in a report.
Three of the four options available to the city – merging, buying and selling - would result in lower electricity prices, the committee said. Only maintaining the status quo would maintain the current pricing situation.
Public response gathered thus far showed that electricity rates were the most important criteria moving forward.
Maintaining the status quo of Guelph Hydro creates “challenges and lost opportunities” in the long term, the committee said.
Guelph Hydro employs 130 people locally and gives roughly $1.5 million back to the city coffers annually in the form of a dividend.
All the options had their pros and cons.
“A lot of mergers fail,” said Guelph Hydro CEO Pankaj Sardana.
He said Guelph Hydro has had several informal conversations with potential suitors or partners, but there have been no formal offers.
“We’re playing very hard to get,” Sardana said, later adding that the city would be “bargaining from a position of strength” if any negotiations were to take place.
He added that any future changes to Guelph Hydro’s ownership would have to get the approval of the Ontario Energy Board, which would invoke the “no harm test” and not endorse any change it felt was going to harm ratepayers.
Coun. Dan Gibson asked Sardana when the best time for merging or selling is.
“The honest answer is ‘I don’t know when the best time is,’” Sardana said, adding that now is definitely the time to at least look into the options.
“I don’t have a crystal ball,” Sardana said.
“There is nothing in front of me right now that says ‘you must sell, you are in trouble.’ Quite the contrary, I think our business is quite solid,” Sardana said.
Janice Folk-Dawson of the
“The numbers on privatization just don’t add up,” Folk-Dawson said, later adding that it would lead to fewer union jobs.
Any merger, she said, would have to a “public to public” one.
Ron East said that merging would leave
Ted Pritchard said the question is not to change, but how and when to change.
Pritchard would like to see exploration into the maintaining ownership option, not just selling or merging.
“I understand change is coming. It may not come as fast as we think,” Pritchard said.
“I want to keep Guelph Hydro in
Donna Jennison said that privatization of Guelph Hydro would inevitably lead to higher rates.
“It’s essential it stay in public domain and is operated in the public interest,” Jennison said.
Steve Dick, president of Guelph Solar, also spoke against selling or merging.
“I don’t see why we want to merge into a larger utility … I don’t see how we’re going to get better service through a merger,” Dick said.
He said he sees more and more use of the electricity grid in the future, despite the growth of solar technology and use on a isolated level.
Paul Costello said the push to merger or sell is a result of pressure from the provincial government.
“We built Guelph Hydro and it’s a brand we should be proud of,” Costello said.
Denis Galon said that if Guelph Hydro got too big, hydro rates would actually go up.
Kari Clifford, speaking on behalf of unionized Guelph Hydro employees, said she was at the meeting to give a face and a voice to those employees.
“Selling what has been called a jewel in the
“Why would you turn your back on a company that has provided you with over $25 million in dividends to date?” she said.
“I think we’re doing quite well as we are right now.”
