Rush to judgment: How the sale of Guelph Hydro leaves a trail of deception

By Gerry Barker

October 26, 2017

Citizens have just 47 days left to mobilize and protect their ownership of Guelph Hydro before council votes to accept the Strategic Options Committee’s (SOC) recommendation. A memorandum of agreement has already been signed between Mississauga-based Alectra Utilities and the City of Guelph, owners of Guelph Hydro.

That being the case, why is the SOC recommending and Chief Administrative Officer, Derrick Thomson, agreeing to hold “Town Hall” meetings to inform the public of the details of this agreement that has been crafted behind closed doors?

Well a funny thing happened on the way to cutting this deal.

Digging into the SOC’s own document presented June 2016 to council, here’s their timetable for investigating and recommending an alleged suitable partner to take over Guelph Hydro.

Here are some excerpts from that document so you can judge for yourselves whether this is a con job or just an unvarnished lie?

Here’s what the SOC told council last year

Phase 1 (Complete)

Explore options; begin community consultation, present findings and recommendations to Guelph City Council in early 2017.

Phase 2 (March to June)

Scan the industry for potential merger partners. Consider publicly owned utility companies likely to provide value to Guelph Hydro customers, the City and the community.

(June to fall) If City Council votes to explore further: Engage specific targets, develop a preliminary business case and financial analysis, outline impact on shareholder’s rate payers, discuss governance, compare to maintaining full ownership, and make recommendation to City Council.

Phase 3 (fall to winter)

If Council decides to pursue a merger: Enter into memorandum of understanding, announce the parties involved, continue community engagement, begin exclusive negotiations, conduct financial, legal, operational and regulatory due diligence, develop merger and shareholder agreements, finalize rate impact and make recommendation to City Council.

Phase 4 (late 2017 to 2018)

If City Council approves the transaction: submit a MAADs (Merger And Acquisition Document) application to the OEB (Ontario Energy Board) for approval, develop implementation plan and establish leadership and governance of the new utility. Following OEB approval the transaction would close, the parties would enter into the shareholders’ agreement, and the merger would be given full legal effect.

Recommended Next Steps

Given the potential cost of developing complete business cases with multiple parties, the SOC recommends developing preliminary business cases with the most promising candidates and making a recommendation to Council in early fall 2017. This approach is a cost effective way to provide Council with more information while being fair and respectful to potential merger partners.

The Guelph Hydro board affirmed the recommendations made at the outset of this report at its May 29, 2017 board meeting.

*         *         *         *

GS comment: This timetable has turned out to be a myth perpetrated by not only the SOC but with the support of the chair of Guelph Municipal Holdings Inc., Mayor Guthrie. You see, the SOC was not directly linked to city council but to the failed GMHI operation. Here’s why:

SOC Recommendation

  1. THAT the Strategies and Options Committee (the “SOC”) of Guelph Municipal Holdings Inc. (“GMHI”) be directed to conduct further discussions, engage in further due diligence, and prepare preliminary business cases to assess potential mergers between Guelph Hydro Electric Systems Inc. (“Guelph Hydro”) and potential merger partners.
  2. THAT the SOC continue its communications and community engagement to inform its work.
  3. THAT the SOC report back to Council in early fall 2017 with the results of further discussions and due diligence, communications and community engagement and a preliminary business case, including recommendations regarding next steps.

The plot thickens

So the SOC lied about its timetable to dispose of Guelph Hydro.

Were the 12 potential partners that had indicated interest in merging with Guelph Hydro not considered by the SOC?

Why did the SOC speed up the decision by almost six months? Was the SOC ordered to do so and if so, by whom and why?

The SOC committee originally had five members: Co-chairs CAO Thomson and GMHI CEO Pankaj Sardana, now CEO of Guelph Hydro, plus Robert Bell, a member of the Guelph Hydro Board of Directors, and two civilian members who resigned.

The SOC committee was revamped with CAO Thomson sharing the chair’s job with Guelph Hydro Chair, Jane Armstrong. Ms. Armstrong replaced Mr. Sardana and two new civilian members were appointed, one of who was a former member of the GMHI board of directors.

This shuffle came out of the blue with no explanation as to why it was necessary.

The SOC functioned chiefly behind closed doors only reporting periodically to city council that went into closed session. Despite the SOC claims of engaging members of the community, most people had no clue of what was going on in regards to their property.

It is now apparent there is determination on the part of the Mayor to complete this deal before next year’s civic election. If he truly believes that this is a good deal for Guelph, then why won’t he release full details of the memorandum of agreement between GMHI and Alectra?

That’s all predicated on his decision to run again. He has denied that he has been approached by the Progressive Conservatives to run in the next Provincial election next June.

It is odd that the link with GMHI and the SOC even exists. Perhaps city council did not want to get its hands dirty if the bad stuff hits the fan. In my opinion, after tracking the history of all this, there is an unprecedented storm of civic discontent looming.

Note: The following is an informed comment in today’s guelphspeaks. ca written by contributor Colleen spelling out some revealing details of the Alectra proposal:

“The recently merged Alectra Company is four large provincial players – Hydro One Brampton, which was purchased by Alectra, and Powerstream, Enersource and Horizon. Remember Horizon? They are the ones that the citizens of Guelph did not want to partner with in 2007-2008. Here they are again. Guelph has been guaranteed a seat on the Alectra board, which will then have 14 board members. With a 4% share in Alectra it’s a pretty small seat. Customer service will not be local. Our general service customers already pay 37% less than the provincial average so they will not see any further savings. Residential customers thinking that they will save money are misinformed. They will not see an increase on the distribution portion of their bill only for a period of time. This amounts to about 20% of the electricity portion of their bill. So, what the “nothing but good news for Guelph” that Mr. Mayor is talking about? A bigger dividend payment to the City.”

 

Perhaps the city administration should inform the public of how much this project has cost so far. There was a consultant hired to steer this to a conclusion as evidenced by the content and words of the elected officials and the SOC members who are not elected.

At this stage, the public remains in the dark and judging from the secretive way this project has been conceived and misled the public, the responsibility lies with city council that must either approve it or just say no.

It is surprising that the Mayor was responsible for initially bringing the GMHI disaster out in the open and launching an investigation. But now, he is promoting this merger of Guelph Hydro with Alectra Utilities and the details are back in the closet.

This is the same kind of handling of important public issues that were masked by his predecessor for eight years aided and abetted by senior staff almost all of who are no longer with the city.

Mr. Mayor, please level with the people

Management on the Mayor’s level is complex and required patience, understanding, being tough and fair-minded, occasionally, being ruthless. Mayor Guthrie’s weakness is trying to be all things to all people. When he was elected in 2014, I told him to serve the people not the staff and council opponents.

This is a time for redemption and courage. Let’s hope Mayor Guthrie exercises both.

A good beginning is to level with the people and explain this agreement in detail. If the Mayor believes the deal is in the best interests of the citizens, then explain why in terms they understand. I know, it is tough to explain complicated deals but it is possible and with professional help, essential.

The evidence is mounting that’s creating doubt in the people’s minds.

In my opinion, I remain concerned about the link with GMHI and the Community Energy Initiative. Also the Alectra mission statement includes green energy technology development. Alectra’s promise is not backed up with precise information and management. This city has just experienced a costly misadventure in experiments with green power self-sufficiency. The price tag is a loss of shareholder equity in GMHI of some $63 million.

This is supposed to be an amalgamation of small to medium sized municipally owned electric distribution systems. It should not include dabbling in costly green power projects. History has shown alleged cost reductions linked to green power in the name of climate change are not achieved but instead, boost costs to the consumer.

This consolidation of local power distribution systems is a part of the Liberal government’s energy plan that so far has delivered the highest cost of electric power to Ontario consumers in the country.

Ontario’s leaders tore down gas energy generating plants in Oakvile and Mississauga to save four Liberal seats in the 2010 provincial election… it worked!

Then the Liberals awarded rich wind and solar power contracts to major corporations such TransCanada Pipelines.

In their rush to achieve green power at any cost, the Liberals sold 57 per cent of Hydro One to private enterprise allegedly to balance the books in 2017. That last one is a doozy as the privatized Hydro One just spent $4 billion to buy the electric generating and distribution system serving 375,000 Seattle and area customers. Most of its generating capability is coal-fired. That’s ironic in that we banished coal usage in Ontario some time ago.

The intention of Alectra to build a Green Power Technology Centre in Guelph is something we don’t need or want. Been there, done that.

Sorry Alectra, NO SALE

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1 Comment

Filed under Between the Lines

One response to “Rush to judgment: How the sale of Guelph Hydro leaves a trail of deception

  1. Milton Burns

    In the corporate( (real) world when a company puts itself or a subsidiary up for sale i the standard procedure is to hire an investment banker.Although we are saving the cost of such. it is costing,it is Guelph taxpayers an estimated $2.8 million and in turn get a re-shuffled five man Strategic Options Committee, none of which have very,very little or no experience.

    Now we have a rush to rid ourselves of a Guelph Hydro that has served it s citizens for many decades. Alectra has over 1.Million while Guelph Hydro has 55.000 customers, a factor of over 18 times the size.

    If anyone or anybody believes that Guleph Hydro can maintain its identity they are seriously very delusional and that includes Mayor Gutherie, the Stratigic Option Committee and any councilor who votes for the approval of this merger.

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