On Wednesday evening, Guelph City Council will vote on whether to merge Guelph Hydro with Alectra, a utility company owned by a number of municipalities, including Mississauga, Hamilton, Barrie, St. Catharines and Vaughan.
There will be 31 people speaking as delegates at Tuesday’s meeting prior to the vote.
To give a basic sense of what is happening, here are some questions and answers regarding the merger.
Who owns Guelph Hydro?
You do. The City of Guelph is the only shareholder of a separate corporate entity that runs Guelph Hydro.
Does it make money?
Yes. Guelph Hydro is considered a very well run and successful utility. According to the city it is valued at $129.4 million, has assets of $228 million and pays an annual dividend to the city. In 2016 the city received $1.5 million from Guelph Hydro, part of an overall dividend of $3 million.
If it’s successful, why merge with someone else?
Bigger utilities are potentially better positioned moving forward to take advantage of changes in technology, manage rate fluctuations and operate on an economy of scale. The provincial government is also pushing for fewer, bigger utility companies.
Do we have to merge?
No.
Has Guelph ever looked at merging with someone before?
Yes, in 2008 council voted 8-5 against merging with Horizon Utilities.
What other options are there?
Plenty. Guelph could continue to operate as it has, it could look for a better merger deal now or later, it could sell the utility to a private utility company or it could delay making any decision at all. But the prevailing feeling is that they would eventually have to sell or merge.
What is the city saying?
The city spent over a year, using both staff resources and independent consultants, to come up with the recommendation that Guelph should merge with Alectra and has negotiated a deal to be voted on Tuesday.
Will Guelph Hydro employees lose their jobs?
Some likely will. The city says approximately 30 positions are expected to be addressed through attrition, voluntary retirement or voluntary separation, "whenever possible." An equal number of positions would be offered other jobs with Alectra outside Guelph.
Will the city still be the master of its own hydro domain?
No. Guelph will own just 4.63 per cent ownership of Alectra and have one representative on its current 13-member board of directors.
What does the city say are some of the key benefits of a merger?
Benefits of a merger as detailed in a staff report include:
- an initial $18.5 million dividend to the city
- the city would still be eligible to receive annual dividends that could be better than those it currently receives
- Guelph would be home to an operations centre for at least 10 years
- Guelph would be home to a green technology innovation centre for at least eight years, employing up to 10 people
- Alectra will maintain and perhaps improve on Guelph Hydro’s high standards of service
- Alectra has no intention of being swallowed up by a private utility
- merging with Alectra will result in lower and slower increases to electricity rates
- the city will be in a position to better take advantage of technological advances and initiatives
What do those opposed to a merger say?
That:
- Guelph isn’t getting full value for its well-run and profitable utility in the merger
- a merger may eventually be warranted, but not now
- many of the benefits the city lists are speculative or potentially temporary
- Guelph might eventually be without an operations centre, given that it is only guaranteed for 10 years
- a better deal could be had if we wait
- Guelph jobs will be lost
- Guelph loses control of the decision-making process
- Alectra could eventually be swallowed up by a private utility, potentially eliminating or reducing any city input into decisions.
Wednesday’s public meeting starts at 6:30 p.m. at City Hall.
