Monthly Archives: November 2017

The Guelph Hydro merger with Alectra is aimed at 13-city councillors poised to give the $300 million utility away

By Gerry Barker

November 30, 2017

At a recent closed-session council meeting there was a memorandum of agreement signed between city council either Alectra Utilities or Alectra Inc..

Only one councillor voted against it. We are not prepared to reveal the name but we can say it was not the councillor who voted against the motion. Because of the threat that a councillor revealing the result of any decision made in closed-session, that individual could be charged under the code of conduct placed on members of council.

Yes folks, this is supposed to be a transparent, open and democratic civic government.

The shocker is that council went ahead and voted for a deal of which they knew little. They voted on the recommendation of the Strategies and Options Committee (SOC) composed of five non-elected members. Council was not involved in direct negotiations and will be informed of the final agreement Thursday, November 30.

Shearing the sheep

Who are they? Sheep ready to be sheared?

So, several people have wondered what is the rush to approve this on December 13.

Here are some of the reasons:

Alectra wants this utility because it is well run and strategically located for its expansion plans into southwestern Ontario. And, they’re getting it for an undisclosed share of the Alectra profits. This is the most unbelievable one-sided deal in the city’s history.

Alectra get a $300 million power distribution system for a super minority share of Alectra’s profits.

And the majority of council apparently agrees to this?

The concern is that a new government in Ontario will make a number of changes in the generation and distribution of power. The Progressive Conservatives have already announced they will cut power rates by 12 per cent on top of the Wynne government’s cut of power costs by 25 per cent. If this keeps up, electricity will be free.

Wrap it up

Alectra wants it wrapped up before the June 7, 2018 provincial election because there may be changes in the merging of Local Community Distribution systems (LCD).

Presumably, the merger would rid the city of Guelph Municipal Holdings Inc’s hard liabilities including the two District Energy pumps in the Sleeman Centre and the Hanlon Business Park and their contracts. That’s an $11.4 million wasteful project.

There are a number of questions that have been raised concerning the benefits to Guelph citizens, the decision-making history that was mostly conducted in closed-session. Each councillor received a copy of the questions sent last week, but no response.

The result is a total lack of financial details of the merger.

No information was provided regarding the performance of the members of the Alectra consortium. Don’t you think that should be a concern of city council? How is this working for Barrie, Simcoe County, Markham, Vaughan, Mississauga, Hamilton, Brampton, and St. Catharines?

Don’t you think that knowledge of Alectra operations would be an important part of the decision about to give away a $300 million asset?

One that didn’t work out

Here is one experience of what happened when Alectra tried to take over an LCD

Collus power was a 50/50 ownership split between Collingwood and Alectra. Collingwood decided to sell their 50% and Alectra submitted a bid. They did not win, part of the reason being that dividends were not paid as promised.

And Council wants to merge Guelph Hydro with Alectra based on this report? More to the point, apparently Alectra is known to buy LCD’s or in this case failed to buy the other half of Collus because they failed to pay the promised dividends.

So, why don’t they just buy Guelph Hydro?

The omission of the facts of such a merger, including increased customer service charges that allegedly doubled, once the LCD candidate joins the Alectra group. Also, the impact of increasing distribution costs throughout the system that Alectra can levy its retail customers at will.

Ah! The unintended consequences of promises made but not fulfilled. Once the deal is approved, Guelph’s 55,000 Hydro customers have no recourse to bail out of the deal and no control over the increased costs they will have to pay.

The impact on so many Guelph Hydro services to its customers seems to be ignored by council.

Again if you don’t know the impact costs why are you buying into the deal?

Yet, despite this lack of important merger information to which the stakeholders were entitled, their representatives went ahead and voted to give Guelph Hydro away. If the vote on the memorandum of agreement stands up December 13, they will formally approve the merger without informing their constituents of the real reasons why and explain the benefits to customers. Our only hope is that the people rise up and protest to their councillors.

Just Ask Us Anything

The selling of this crock is a sick joke. “Just Ask us Anything” promotion on the website, energizingtomorrow.ca was deliberately designed not to provide answers because the people answering it didn’t know anything about the actual details of the merger.

All the materials linked to the promotion of the deal were carefully scripted to ensure the real details did not leak out.

It was a lie and city council allowed it to happen. It abused the public trust and if it is approved there will be a price to pay next year.

The wisest choice council should made is to defer the final decision until the owners of Guelph Hydro are informed of the details and are equipped to approve or disapprove the merger.

That’s the way democracy is supposed to work.

Why should the public care about Alectra’s motives and sense of urgency?

Send in the Clowns

This would have gone a lot smoother if the SOC had fulfilled its mandate and presented the full story concerning the merger. Instead it accepted a contrived presentation designed to influence only 13 councillors. They didn’t care about the citizens who own Guelph Hydro.

Judging by the vote result in signing the memorandum of agreement with Alectra either the councillors were duped by those smooth talking big city boys or they were afraid to make the right decision to protect their constituents.

Is this an adult daycare?

Nobody would blame an elected official for being thoughtful, respectful and honest.

It’s a great responsibility.

But when a councillor decides that the public does not need to know its public business, then our democratic systems crumble.

If you don’t know what you’re buying, why buy it?

NOTE: Sign up to send a petition to Council if you are opposed to this merger. Forward a note asking to be added to the list to gerrybarker76@gmail.com  Please include your name, address and ward for verification only.   Thank you.

NOTE: If you missed thr list of questions asked of council, click on the top of this post for connection: Why is Guelph Hydro merging with Alectra Inc. without answers before council approves it December 13?

 

 

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Why is Guelph Hydro merging with Alectra Inc. without answers before council approves it December 13?

By Gerry Barker

November 27, 2017

I was lying in bed last Friday morning contemplating my day and trying to absorb more on the Trump follies south of the border.

I received a call from a counciilor and we talked about the Guelph Hydro proposed merger with Alectra Inc. I was advised to send my question to energizingtomorrow.ca where I could get all the answers I felt were needed.

On that basis, I went to work and prepared some 50 questions that I felt the Hydro customers and residents needed to know about this proposal and its consequences.

Here’s a snapshot of a portion of the website that was recommended I use:

The committee’s (SOC) education and community engagement efforts will continue through all phases of the process.

If Council decides to pursue merger negotiations, the community will be invited to comment on any proposed merger before Council makes its final decision.

Learn more. Ask us anything.

energizingtomorrow.ca

Well, city council has already signed a memorandum of agreement with Alectra, the corporation ready to merge Guelph Hydro. The merger would give away Guelph Hydro without any immediate compensation for the $228.4 million investment. Hydro’s customer’s investment in poles, wires, substations, equipment, technical staff and Hydro headquarters would be sucked into the Alectra network.

There is no consideration for goodwill, operating surpluses, investments or the wonderful culture of the organization that is described by knowledgeable experts as well run and profitable. In fact it is one of the top performing Local Community Distribution operations in the province.

So here’s what happened when I attempted to “Ask us anything.”

After talking to the councillor, he cautioned that I should not send my questions to CAO Derrick Thomson, who is also co-chair of the SOC, but to the energizingtomorro website and all my questions would be answered.

Well it didn’t work out that way.

Before I disclose my experience with this website, let me remind the administration of its determination to invest and practise transparency and open government.

Now it’s important to remember that the former administration spent some $600,000 to a Toronto consultant to develop a system of government that reflected open access and transparency to allow public participation.

In the case of this merger it isn’t true.

When I went into the energizingtomorrow website, there were six ID boxes and a box for my question(s).

I attempted to post 12 questions and was denied. Tried again with three questions and denied again. The reason was that the message box only allowed 255 characters per question. The restriction of the number of words and spaces per question and not allowing multiple questions, makes “Ask us Anything” well, untrue. It implies access to answering all and every question but restricts it.

In polite circles that is censoring public input and participation in the process.

I sent an email to CAO Derrick Thomson and received a muddled reply from energizing tomorrow based in Guelph Hydro.

So, I engaged plan B. I’ll send my questions to the members of council who will make the final decision December 13 just 16 days from now. I’m doing this because I believe councllors should demand answers to these questions on behalf of the citizens they represent.

 

So here is the intro addressed to council and the questions:

FROM: Gerry Barker

271 Riverview Place

Guelph, ON N1E 7G9

As a resident and taxpayer, I request answers to the following questions about the proposed merger of Guelph Hydro with Alectra Inc. As members of council, you will be asked to approve or disapprove this proposal December 13.

The reason I am asking you, the decision makers, to help answer these question is because I attempted to use the energizingtomorrow.ca “Ask us Anything” website. Well, it is setup to accept only 255 characters per question including the word spaces. It just wasn’t designed to answer multiple questions. I will refrain from explaining why.

I am presenting the questions to seek answers to better understand what’s under the hood of this project. I would appreciate a response via e-mail: gerrybarker76@gmail.com at your earliest convenience.

Thanks for your input and responses. Best, Gerry Barker

 

The questions

Is Guelph Hydro wholly owned by the City of Guelph?

Why was the Strategies and Options Committee (SOC) appointed by city council and what was its mandate?

Why were no elected officials appointed to the SOC?

How much were the SOC members paid in compensation for their services?

My current hydro bill contained a leaflet that stated: “Guelph Hydro begins merger talks with Alectra.” If this is true, why has city council already signed a memorandum of agreement with Alectra that is to be approved December 13?

Are Guelph stakeholders receiving any immediate reimbursement for turning over Guelph Hydro and its assets to Alectra?

What is the historical relationship between Guelph Hydro and Guelph Municipal Holdings Inc. (GMHI)?

What is the status of GMHI and it’s finances?

Who and how many third parties expressed an interest to the SOC to buy or merge with Guelph Hydro?

Were these inquiries reviewed by the SOC?

If so, what was the outcome of these enquiries?

Why is the public not informed why Alectra was selected by the SOC?

Was there any incentive offered to members of the SOC, city council and Guelph Hydro to promote acceptance of this merger?

What are the actual benefits for Guelph that will occur by agreeing to this Alectra merger?

Why was the membership composition of the SOC changed? Why were three members on the original committee replaced?

Did city council approve these changes in open council or closed session?

Why is the City/Guelph Hydro spending $2.36 million to expedite this merger?

Did the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

What are the terms of this agreement including finances?

Does the City/Guelph Hydro agree to turnover Guelph Hydro to Alectra in return for a share of the Alectra profits?

What is that share of profits and interest in Alectra?

Are these Alectra profits guaranteed in the memorandum of agreement?

Does the city council know exactly the impact of the agreement on the citizen owners of the utility?

Why did the SOC mandate change in February 2017 to exclude the sale of Guelph Hydro from its consideration?

Is it a coincidence that the SOC dropped the option of selling Guelph Hydro just a few days following the incorporation of Alectra Inc. January 31, 2017?

Why did the SOC not reveal that decision released by a former member of the committee recently?

Did the SOC claim that the reason for the change in its original mandate was a matter of “client-solicitor privilege?”

Who was the client and who was the solicitor?

Explain why this unknown “client” was able to change the mandate of the SOC?

When does the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

Who are the members of city council who voted to sign this memorandum of agreement with Alectra and who did not?

Is this agreement binding on the stakeholders, the people of Guelph?

What is proposed to be the share of Alectra profits and Guelph’s interests?

How many respondents to the energizingtomorrow website are in favour of the merger?

How many attendees at the Town Hall meetings responded in favour and is this on the record?

Who sponsored and owns energizingtomorrow.ca website and how much did it cost?

How many respondents said they were in favour of the merger in the telephone survey contacting 500 residents?

What was the total number of calls made by the survey company?

What were the scripted questions asked in the telephone survey?

Did the City or Guelph Hydro hire a consultant to design and execute the merger proposal? If so, what did it cost in total?

Guelph Hydro has been praised on several levels that it is extremely well run with higher than average customer service including response times. It is profitable earning $7 million in 2016 after expenses. So, what’s the sudden urgency to merge it with Alectra when Guelph Hydro customers lose control?

Why are the SOC negotiations and progress information not being shared with the public stakeholders especially when there is no competitive bid?

Why is Guelph Hydro involved in Green Energy technology when a mismanaged sustainable energy project by GMHI has cost the citizens $63 million in loss of shareholder equity?

Is Alectra agreeing to take the $93 million long-term debt of Guelph hydro?

Who is representing the citizens’ interests negotiating the merger details?

We the people have the power

These questions represent an example of crowd-sourcing where the people’s collective knowledge and experience is far greater than the wishes of the powerful minority.

Now is the time to express the power of that collective and express your opposition to this proposal by informing your councillor. With only 16 days left, we still don’t know, not only the answers to these questions but the details of any agreement. One negotiated in private in which an unknown corporation that has made sketchy promises to take over our treasured Guelph Hydro with no compensation to the stakeholders.

Now is the time to act and just say no.

 

 

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Here’s proof that Guelph’s costs compared to Ontario’s averages and the City of Barrie are shockingly too high

By Gerry Barker

November 23, 2017

Last night, Guelph resident Pat Fung, CPA, CA, was a delegate presenting commentary on the 2018 city-operating budget. He was one of 21 delegates registered to address council.

But a funny thing happened on the way to the forum.

The day before the meeting, Tara Baker, General Manager of Finance and Treasurer, told the local weekly about a change in the staff budget request resulting in an additional $890,000 that createda lower costing of the staff’s original budget recommendations.

You will recall the first property tax increase presented by staff was 4.84 per cent for 2018. The tax-based changes provided by the Municipal Property Assessment Corporation (MPAC) will reduce that to 4.4 per cent. It seems odd that the MPAC revision was revealed last night just prior to the public budget meeting. .

Instead, Mr. Fung was given five minutes to present a detailed analysis comparing the high per capita costs of Guelph’s operational overhead to the provincial averages. His figures were extracted from the city’s management consultant’s (BMA) 2016 report. The per capita compares the cost of services per person. The results are as follows based on a population of 130,000:

Service                    Guelph         Ontario    difference      Percent     Dollar cost

Fire                                 $195          $164              $31               19%        $4,030,000

Waste Collection          $51             $13                $38              292%       $4.940.000

Waste disposal              $37            $11                 $26              236%      $3,380,000

Waste diversion            $70            $24                $46               192%      $5,980,000

Library                            $65           $49                $16                33%        $2,080,000

Parks                               $64           $44               $20                45%         $2,600,000

General Government   $144         $14              $30                26%          $3,900,000

Transit                            $130         $99                 $31                31%       $4,030,000

POA                                 $22          $11                  $11                100%    $1,430.000

Total                               $778         $529              $249               47%      $32,370,000

This is another example of Pat Fung’s expert analysis of the facts. Two years ago he presented a detailed cost analysis using figures from the 214 BMA consultants’ report and the city’s published financial data. The conclusions then were similar comparing the overhead costs of Kitchener and Cambridge to those of Guelph. Then Guelph’s aggregate overhead costs two years ago were slightly more than 52 per cent greater than the two neighbouring cities.

The 2016 total cost of these services is more than $32,370,000 for the 130,000 residents of Guelph. That’s $249 for 130,000 Guelph residents more that the Ontario average.

What’s wrong with this picture?

It appears that his findings were ignored, so last night he presented two comparison charts. The one above compares operating costs to the Ontario average. The second chart compares the overhead costs of the City of Guelph with the City of Barrie.

The troubling aspect of the city budget process emphasizes growth regardless of the impact on every citizen and especially the taxpayers. They have faced property tax increases exceeding 3 per cent for the past 10 years, except in“2014 when the increase was 2.60 per cent.

Let’s look at the straight up comparison between Guelph and Barrie.

Object                                            Barrie              Guelph         Difference    % Increase

Total Expenses 2016             $365,939,939     $396,478,178     $30,538,231    8%

Population (2016)                        141,434            131,794                  (9,640)

Year the city was founded            1833                1827

Area square kilometers               99.04                 82.20                  (11.84)

Cost per citizen                            $2,587              $3,008                 $421             16%

Cost per square kilometre   $3,694,870        $4,456,768          $851,898         23%

Taxes revenue                       $207,649,647     $217,753,530      $10,112,883    5%

Salaries & Benefits              $154,346,450     $199.963,070    $45,616,620      30%

Labour costs of revenue            79.33 %            89.18 %                                    9.89%

Salaries, benefits per citizen   $1,091                $1,517                     $426         39%

Taxes per citizen                        $1,468                $1,652                    $184         13%

Some observations:

Guelph has a lower population and area than Barrie yet in every category, Guelph’s costs are considerably higher. The area of Salaries and Benefits reflects the view of many citizens and analysts that either the city staff is overpaid or underutilized.

Just the additional $45,616,620 that Guelph pays its staff compared to Barrie reveals total mismanagement of Human Resources, Finance and senior staff. Council was either too careless about the data surrounding this huge discrepancy or they lacked the skills needed for critical analysis of operating the city. Council cannot ignore that citizens each paid $426 in 2016 or 39 per cent more than citizens of Barrie.

Instead, on the previous three budgets, staff has recommended staff additions of 42 individuals. For 2018, staff is recommending 16 additional employees some of who will start at more than $100,000, plus benefits.

How does this square with the $396,478,178 that council approved in the 2016 budget compared to the City of Barrie’s expense budget of $365, 939,947? Guelph spent $30,538,231 more than Barrie that has a larger population and service area. Guelph also received $10,112,883 more in tax revenues than Barrie.

But the real budget crusher is the $45,616,620, that Guelph paid its employees more than Barrie.

Where financial management went off the track

During her 2006 election campaign, Ms. Farbridge’s slogan was: “We’re going to put Guelph back on track.” It soon became a joke as the claim foundered on a series of management blunders started in early 2007. The top senior managers were dismissed including Chief Administrative Officer (CAO), Larry Kotseff and CFO Douglas Kennedy. In 2009, Hans Loewig earned some $201,000 and was the only senior manager earning more than $200,000. In 2016, CAO Ann Pappert was paid $263,000 for five months work, resigning May 26, 2016.

Guelph has been overly generous with staff, particularly on the high end of management. Is it any wonder that our salaries and benefits are more than $45 million higher than that of Barrie?

A Farbridge legacy was to keep staff costs under the hood. Most negotiations were mostly conducted in closed-sessions without any report to the public its outcomes. Without public accountability, there is no check of costs or rationale for increases.

Today we are paying the price.

The most glaring example of overpaying staff is with the Fire Department. Guelph is paying its firemen 19 per cent more than the Ontario average. The facts are that the occurrences when the fire Department attends a fire are diminishing while salaries increase.

In my opinion, the evidence is there that this constant demand for staff increases and unknown project spending has exponentially boosted costs compared to other Ontario municipalities. Hopefully the financial management will lead the way in expediting changes and reduce costs.

The finance department faces a five-year lack of accurate forecasting and fiscal discipline. The city needs to demand council to engage an independent staff rationalization examination organization to reorganizes the operational systems to use fewer resources to increase efficiency. Council turned the proposal down last year when the city budgets were being prepared.

The argument was that the cost of such a project, an estimated $500,000, was too high. Yet in 2013, council approved spending some $600,000 to establish a transparency and open government plan. In 2015, a manager of the program was hired on a contract basis to execute the plan. His salary was $93,000 and he is still employed by the city. He is believed to be on sick leave but his employment status is unknown.

The only way this unbridled spending can be changed next year is to elect a majority of council who will reform the way the city is being run and who brings experience, common sense and determination to undo the damage done to the city in the previous ten years. Only a strong council, who doesn’t bring partisan baggage to the table can create the changes people who (voted in 2014) expected but their hopes did not materialize.

The lousy deal will give Guelph Hydro away for a small piece of a corporate pie

The current council consideration to merge Guelph Hydro with Alectra Utilities of Mississauga is an example of secret and sloppy work on the part of the Strategic Options Committee, formed by council. Its mandate was to investigate and negotiate either a sale of Guelph Hydro or a merger with a larger electric distribution network. The “sale” option was removed from the mandate last February with the committee concentrating on a merger.

Simply, it’s a bad deal with the owners of Guelph Hydro left in the dark. What we do know is that we turn over Guelph Hydro with installed wires, poles substations and headquarters, building for an unknown share of Alectra, either the utilities portion or the incorporated body.

Then we are informed that council has already signed an agreement to merge and will vote December 13 to allegedly finalize it. There is a petition circulating that is opposed to the merger. It’s an opportunity to coerce members of council to say no until there is further research and effort to examine all the options.

If interested in signing the petition email your intent to gerrybarker76@gmasil.com to be added to the growing list. Thank you for participating.

People matter.

 

 

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An Open Letter to Guelph Hydro Customers

Note: The following is an unbiased assessment of the merger proposal between Guelph Hydro and Alectra Inc. It is written by Energy Lawyer Jay Shepherd whose experience and expertise of energy operations in Ontario, gives Guelph’s 55,000 Hydro customers a true picture of what’s at stake. This is a lengthy overview but the evidence is there that this proposal may not be right for Guelph. Guelphspeaks.ca, feels that it is important for all citizens to familiarize themselves with the effect to them if city council approves the proposal December 13, 2017. The piece has been lighty edited for emphasis. GB

Posted on November 5, 2017

by Jay Shepherd

Alectra Utilities and Guelph Hydro are discussing a merger, the headlines say.

Already there is a flurry of information available to local Guelph residents about those discussions, and the many benefits of joining the Alectra fold.  For the most part, that information is carefully crafted by Alectra, or other merger proponents, to show the transaction and its aftermath in a positive light.

I don’t have a view one way or another on the proposed merger.  Although in my day job (energy regulation lawyer representing customers) I have learned a great deal about both utilities, I think it’s premature to express an opinion until the details of the actual deal are known.  Even then, it is the opinion of Guelph residents that really matters. Mine, not so much.

I do, though, have a view about the information that is provided to local residents so that they can form their own opinion.  Guelph residents should have all the facts, not just a sales pitch.

To that end, this article tries to provide a dispassionate take on some of the issues that could inform local opinion.

What’s at stake?

The customer-related benefits of a merger between Guelph Hydro and Alectra             Utilities will generally be characterized as follows:

  1. Lower Rates.  There will be scale and other economies as a result of the merger that will translate into lower rates for customers.
  2. Better Service.  A larger organization will be better run, with the result that reliability, customer service, and other customer priorities will improve.
  3. It’s Inevitable.  Guelph Hydro has to merge with someone, or it will be unable to meet future regulatory requirements for local utilities.  Alectra is their natural partner.

All three benefits seem intuitive, and are cited in most utility mergers, but in each case the devil is actually in the details.  None is actually true in every merger, and it is not obvious that they will be true for Guelph Hydro customers.

Lower Rates

There are really three questions associated with the “lower rates” argument:

  • Will there be cost efficiencies?
  • When will customers get the benefit of cost efficiencies?
  • Will the cost efficiencies actually translate into lower rates for all customers?

Cost efficiencies:

The most useful data is the history of rate increases for Guelph and for the Alectra predecessors.  Two of those Alectra companies, Powerstream and Horizon, were formed from mergers.  Powerstream is made up of five companies, formed in three merger transactions.  Horizon is made up of two companies.

If you use Guelph Hydro as the baseline, residential annual distribution bills went up 20.6% from 2005 (the first year we have comparable actual rates) to 2018 (current proposed rate in their rate application).  That is an annual rate of 1.57%, or just under the rate of inflation.

Guelph Hydro small business and commercial/industrial customers did much better, showing 12-year decreases of 16.5% and 5.9% respectively.

For the Horizon residential customers, they did better than Guelph Hydro.  Customers in St. Catharines had increases of 15.6% over that period, which works out to 1.21% annually.  Customers in Hamilton had increases of 9.8% over that period – less than 1% per year.

By contrast, the Horizon small business and commercial/industrial customer did poorly.  Small business customers from both merged areas had increases of over 60%.  Commercial/industrial customers had increases of 84% in Hamilton, and 102% in St. Catharines.

The Powerstream residential customers did not fare well.  Customers in Richmond Hill and Aurora did fine, at less than 1% per year.  Customers in Barrie ended up at about 1.09% per year.  Customers in Markham, though, have done worse than Guelph – 22.8%, or 1.72% per year.   And for those residential customers in Vaughan, their rates have increased more than 49%, a rate of 3.39% per year.

By contrast, the Vaughan small business and commercial/industrial customers did a little better, with increases of 22.5% and 27.4%, but still much worse than Guelph Hydro, or inflation.  Richmond Hill and Aurora small business and commercial/industrial customers had increases of less than 1% per year, while Markham customers had increases of more than 40%, and Barrie had 33% for small business, and just about inflation for commercial/industrial.

For those who like spreadsheets (like I do), here is the table of the results:

Distribution Rate Increases 2005-2018
Utility Rate Zone Residential Small Business Comm/Ind
Guelph All 20.56% -16.51% -5.94%
Horizon Hamilton 9.78% 60.04% 83.95%
  St. Catharines 15.64% 61.95% 102.29%
Enersource All 34.90% 21.58% 8.58%
Powerstream Richmond Hill 7.58% 9.54% -1.18%
  Vaughan 49.01% 22.50% 27.44%
  Markham 22.77% 41.36% 43.81%
  Barrie 14.03% 33.27% 20.80%
  Aurora 8.70% 7.57% 6.38%
Brampton All 12.70% -0.90% 13.61%

 

The various differences are a function of initial rate levels (see below).  What the overall figures show is that, for some of the merged residential customers in the two Alectra companies with a merger history, there have been some reductions in rates, but they have not been substantial.  On a weighted average basis, Powerstream and Horizon residential customers have rates today that are $6 a month lower than they would have been on a standalone basis (that is, compared to Guelph).  That is the twelve-year impact of the mergers for those customers.  For small business and commercial/industrial customers, on the other hand, they had net increases in rates as a result of the merger activity.

Will this history translate into rate savings for Guelph Hydro customers?  It may, but Guelph will only be about 5% of the merged company.  Its impact on costs will therefore be muted.  Even if there are substantial operational cost savings, only 5% of those savings will ultimately benefit some of the Guelph customers.  The other 95% will go to the rest of the Alectra customers.

Timing of customer benefit. 

The rules of the utility merger game have recently changed.  In the past, merged distributors implemented a five year rate freeze, providing immediate benefits for customers while the cost efficiencies were being realized.  The Powerstream and Horizon transactions all happened under that rule.

The new rule, starting in 2016, is that any savings from a merger go to the shareholders of the merging companies for the first ten years.  The customers get their regular rate increases, and the merged company can ask for more, even if it doesn’t really need the money.  (Alectra expects to get extra shareholder benefits of more than $425 million over the ten years from their recent merger, over and above normal profit levels.)

Alectra has already announced that they plan to seek rate increases in excess of inflation for the next ten years.  Will that apply to Guelph customers?  They haven’t said.

If Alectra seeks rate increases in excess of inflation for Guelph customers as well, that would make them higher than Guelph Hydro rate increases have been for the last decade.  It is therefore not clear that, during this upcoming ten-year period, Guelph rates after an Alectra merger will be better than had Guelph Hydro remained independent.

Will All Customers Actually Benefit?  If there are cost efficiencies, and if customers have the patience to wait the ten years, will all customers benefit.  The answer is, some will and some will not.  The main driver of that result will be the rates for customers today.

Start with residential.  The average residential distribution rates for Alectra customers are 9.9% lower than Guelph Hydro customers.  Each month a Guelph Hydro customer pays about $2.86 more than an Alectra customer with the same electricity use.  (Guelph Hydro customers actually use about 11% less electricity, so their distribution bills are about the same, but this will matter less and less over time.)

Eventually, the residential rates will have to be harmonized.  Given the small size of Guelph relative to the rest of Alectra, the average residential customer could see a reduction of up to $2.72 per month in ten years, when their rates are harmonized with other Alectra customers.

As noted above, this may be wholly or partially offset by higher spending in the meantime but it is not really possible to predict that.  What would Guelph Hydro spend in the next ten years on a standalone basis?  We have no way of knowing.

If residential customers may eventually get a small benefit after ten years, the same is not true of commercial/industrial and small business customers.

A typical commercial or industrial customer in Guelph currently pays on average about $160 a month less than an equivalent customer in Alectra (despite the substantial past rate increases for these customers in the Alectra areas).  This could be a factory, or a small plaza, or an office building, or – close to my heart – a high school.  Sooner or later, their rates have to be harmonized with the Alectra levels, and they will get an extra increase of $152 per month, or just over $1800 per year.  This is on top of all the normal increases for the next ten years.

Small business customers are in the worst position.  Guelph small businesses currently pay about 39% less than Alectra small businesses for electricity distribution.  That difference, $23.13 per month, will have to be corrected at the end of year ten.  As with commercial/industrial customers, they will bear the hit of rate harmonization, to the tune of a $264 per year permanent upward adjustment.

The simple answer, therefore, is that even if there are cost efficiencies, the proportion of those cost efficiencies that benefit Guelph Hydro, if any, will not benefit everyone.  Residential customers may have a small benefit.  Small business, commercial and industrial customers likely will not.

Rate Conclusion: Will there be lower rates for Guelph Hydro customers?  There is no clear answer.  What we do know, based on past history and current forecasts, is that any rate reductions from the merger will be limited, deferred, and available only to some customers.

Better Service

The prospect of better service for Guelph Hydro customers as a result of the merger is less complicated than the rate issue.  The Ontario Energy Board publishes scorecards for every electricity distributor, showing how they are doing on the key measurements of things important to customers, such as reliability and service quality.

We can compare scorecards.  It’s easy.  2016 Scorecards have recently been published.

Reliability.  There are two reliability metrics:  how often is the average customer interrupted (frequency), and how many minutes each year are you without power (duration)?

On frequency, Alectra customers average 1.05 interruptions per year.  This mainly measures the physical quality of the system.  Guelph Hydro customers are slightly worse, at an average of 1.34 interruptions per year.  The industry average is 1.00, so both could improve, but Guelph needs more improvement.  Guelph ranks 48th out of 65 electricity distributors in the province; Alectra ranks 37th .

The results are the opposite when it comes to duration.  This mainly measures repair response times.  Alectra customers average 47.4 minutes each year without power.  Guelph Hydro customers average 42.6 minutes per year.   The industry average is 73.2 minutes per year, so both are very good performers, but Guelph is slightly better.  In rankings, Guelph is 25th and Alectra is 28th.

Customer Service: 

On customer service, there are five metrics:  Connecting new customers, on time appointments, answering phone calls, accuracy of bills, and resolving issues with customers on the first try (called “first contact resolution”)

On connecting new customers, both Alectra and Guelph Hydro do that very well:  99.6% and 99.5% of the time, respectively, they connect customers when they say they will.  Compare that to 98.3%, which is the overall industry average.

Similarly, both are good at showing up for appointments:  99.58% for Alectra, and 99.7% for Guelph Hydro.  Once again, both above the 98.99% level for the industry.

When it comes to their call centres, though, Guelph does quite a bit better, answering 86.7% of customer phone calls within a reasonable time.  This compares to the Alectra average of 80.95%.    The industry average is 84.67%.

The difference between their telephone accessibility performance is fairly large.  To give you an idea of the impact, Guelph Hydro handles about 45,000 telephone calls per year.  At the lower Alectra performance level for call answering, an incremental 2600 customer calls each year in Guelph would not get answered within a reasonable time, i.e. about ten every business day.

Both utilities have excellent billing accuracy:  99.95% for Guelph, and 99.58% for Alectra.  The industry average is 99.41%.

Finally, on first contact resolution, Guelph Hydro has one of the best records in the province, 99.98%.  Of their 45,000 calls each year, all but ten or less have their problem resolved in that call.   The Alectra first contact resolution average is only 82.27%, which would translate in Guelph into almost 8,000 customers each year having to call back or wait for further clarification on their query.

Conclusion on “Better Service.”

The scorecard comparison, therefore, does not indicate that Alectra provides better service than Guelph Hydro.  Both provide generally excellent service, but if there’s an edge, it goes to Guelph Hydro.  The evidence doesn’t indicate that a merger will result in better service for Guelph Hydro customers.

Guelph Hydro is generally known to be a well-run utility.  It serves its customers well, it maintains and operates its system to high standards, and it delivers a very good return to its shareholder, the City of Guelph.  In fact, on that scorecard measure, Guelph Hydro does much better than Alectra.  Guelph Hydro’s most recent profit level was 10.58%; Alectra’s profit averaged 7.79%.

It’s Inevitable

Sooner or later, Guelph Hydro will probably become part of a larger electricity distributor.  It could be a small addition to a much larger entity, like Alectra or Hydro One.  It could be a main partner in a merger of similar-sized utilities.

It is not likely to stay independent forever.  The pressure in the industry is towards consolidation.

On the other hand, Guelph Hydro is not in a position where it must move quickly.  The healthy profit level allows dividends of $3 million per year to the City (at the current standard level of 50% of earnings).  By contrast, at the Alectra profit level the near term dividends would be more like $2.2 million, so there is not likely to be an immediate benefit to the City from the merger.  Of course, in the longer term growth may be greater in the other areas of Alectra, compared to Guelph, creating additional opportunities for the City to profit through growing dividends.

It is also not self-evident that Alectra is the “natural suitor” for Guelph Hydro.  The previous approach to Guelph Hydro from Horizon (before it became part of Alectra) had the advantage that there was potential for geographic consolidation over time of the area in between them.  Some of that is still the case, but the centre of gravity (and focus) of Alectra is still more north of Toronto, not west.

The more logical consolidation for Guelph has always been Cambridge, Kitchener, Waterloo, Milton, Halton Hills and Guelph.  The problem with that potential merger has for years been local personalities and demands by individual cities to have control.  While that situation may not last forever, past attempts at partnership, even on smaller aspects of the business, have not always been successful.

The alternative “natural” merger for Guelph is Burlington, Oakville, Milton, Halton Hills and Guelph.  Personalities may impede that as well, but it is still a good fit from a geographic and demographic point of view.

So, is a merger with someone inevitable?  Probably the answer is yes.  Is a merger with Alectra inevitable?  The fair answer to that is probably no.

Conclusion

Guelph residents are going to hear a lot of things over the coming weeks about the proposed merger between Guelph Hydro and Alectra.  There will be pros and cons to the deal, once the terms have been finalized.

When Guelph residents are asked their opinion – as they should be – they will need to know all the facts.  This summary is intended to provide some of those facts.

  • Jay Shepherd, November 5, 2017

Note – If you feel that this merger proposal between Guelph Hydro and Alectea Utilities is not for Guelph and its citizens, send your name, address and Ward to gerrybaker76@gmail.com and your voice will be heard. You’ll be joining many citizens who have already signed the petition.

 

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There are great expectations by the Mayor of giving Guelph Hydro away

By Gerry Barker

November 17, 2917

You can’t help but wonder what happened to Mayor Cam Guthire in the past three years?

His determination to trade Guelph Hydro for four to five per cent share of Alectra, a consortium of Local Community Distribution (LCD) corporation that it has been assembled. Apparently this is based on bigger is better — but for Guelph?

Is the Mayor smarter than the rest of us?

Well, lets dissect the Seven “Facts” (his words) that he is publishing online to residents. Keep in mind the city has admitted that it is spending $2.36 million to sell this merger with Alectra to citizens. Then the administration says the publicity program will be funded by the so-called Guelph Hydro dividends sent to the city annually.

What’s wrong with this picture? Guelph Hydro is a profitable, well-run utility. Its revenue is almost entirely provided by the 55,000 Hydro customers. It’s one of the illusions that the Mayor fosters in his remarks about the seven “facts” about the merger.

He claims that more than a year has been spent studying the sale or merger of Guelph Hydro. So why are the final negotiation details not being revealed until November 30? The meeting will be held 13 days before council’s final approval or not, as it may turn out.

My information is that the mayor is recruiting, aiding and abetting council’s approval by siding with the gang of seven whom, I’m told, most are in favour of the Alectra Merger which bespeaks of their understanding of the deal.

The Mayor claims “Guelph will benefit from rates that will be better than they’d be if Guelph Hydro remained on its own.” Well, that’s not true. The rule of mergers between LCD’s, freezes the power costs to consumers for ten years. In Guelph’s case it is reported the amounts to a reduction of $40 a year.

The Mayor is mixing apples and oranges here. If this merger is approved, operational

control of Guelph Hydro will be assumed by Alectra. Once that happens, Alectra controls the costs of distribution of power to its consortium. Guelph customers will have no say.

Let’s move on to examine the seven “facts” presented by the Mayor.

Fact 1 – Comparing historical rate increases does not tell the story.

GS Comment – The Mayor is right that no two electric utilities are the same for a number of reasons. But Guelph Hydro has been judged by the government as one of the best run in the province. Again, what are the specifics to accept or deny this merger? What’s in it for the citizens and customers of Guelph Hydro?

This is a decision that we are being asked to support, in a month and a half that will affect the city far into the future when those approving it on council will not be in office.

Just wondering: Why did the Strategic Options Committee (SOC) in closed session last February, remove the option of selling Guelph Hydro from it’s mandate to investigate both merger and sale of the utility? Also, were other interested parties in purchasing Guelph Hydro considered?

Fact 2 – Savings for everyone in Guelph

GS Comment – Consolidating “our business operations” Guelph and Rockwood customers will avoid an estimated 5 per cent distributuon rate increase by 2021 and another estimated five per cent increase in 2016.” The basic information supporting this claim is not revealed nor are the savings to hydro customers.

The Mayor talks about the “potential” savings to the customers but will take years to be beneficial. The day this merger is approved is the day we lose control. The dependence on the Ontario Energy Board to protect our interests and increase dividends to the city counts for nothing. The Mayor cannot assure the citizens that this merger will be beneficial.

On a personal note, we have yet to receive any information outside of the social media world, any pronted information that details what this merger means as customers of Guelph Hydro. Not in the 13 years, we’ve lived here that included the abortive attempt to sell Guelph Hydro in 2008 to Hamilton and St Catherines.

This whole exercise is aimed at the 18 to 44 demographic by sending their message on the Internet. It excludes all thos folks who do not own or use a computer but are voters and customers of Guelph Hydro.

Fact 3 – Rates for busineses in Guelph

GS Comment – Rates for commercial/industrial power users are 39 per cent lower than that of Alectra. So the Mayor states that he expects the Ontario Energy Board would permit Guelph to operate as a “separate rate zone and commercial distribution rates would continue to be lower.” That’s called betting on a long shot with the potential of coming in last..

Next week, guelphspeaks.ca will publish an open letter to the residents of Guelph that is an unbiased report concerning the pro’s and con’s, of the Guelph Hydro/Alectra proposed merger. The author is an Energy Lawyer, Jay Shepherd, who has written extensively about all aspects of Ontario’s power, supply, distribution and government policies.

Fact 4 – Customer service and response time

GS Comment – Despiter the mayor’s claim that he has heard from the community of their concern about customer service and reliability, the minute that he signs this agreement, he cannot guarantee anything. In fact, Guelph Hydro’s record in those two key areas is among the highest in the province with an above average rating in the 90 per cent range well above the provincial average.

The quality of operations and the staff perforamance reflects the evidence that Guelph Hydro is well run and profitable compared to most municipally owned power utilities. Perhaps when a more careful investigation is conducted, Guelph Hydro may be part of a like-minded grouping of LCD’s where customer interests will be considered and transparency will prevail. What’s the rush?

Fact 5 – Who owns Alectra?

GS Comment: As best that can be told there are two Alectra’s. These are Alectra Utilities and Alectra Inc. the one that was incorporated January 31, 2017.

In its press releases, Alectra does not distinguish the roles of the two corporate entities. Apparantly in publishing the “facts” about who owns Alectra, the Mayor apparently cannot figure it out either.

Alecrta Inc. states that it is a publicly-owned utility formed this year. It is like a landlord that owns Hydro One Brampton that it purchased, and the rest of the Alectra family are partners. By agreeing to merge with Alectra turning over municipal control of each member’s power operation, we lose control.

“Following a merger, Guelph would join this list of municipal shareholders. We would continue to have an important say over hydro decisions affecting our community and we will continue to receive annual dividends we can re-invest towards community initiatives,” states the Mayor without attribution.

Here are two giant stretches of the truth. How can Alectra Inc. claim the members of its LCD consortium are publicly owned when Alectra has control? If Guelph council signs this agreement, say goodbye to Guelph Hydro in return for a miniscule share of Alectra’s profits, if any.

On the increased dividends that the mayor claims as fact, what assurances will the city receive of any increased profit? We’re facing giving up our power distribution utility for what? What’s even worse the chances are we’ll never know anything about the corporation that wan’t to control our property without any recource.

There is one thing we’ve learned about Alectra. It has borrowed some $225 million from a number of power utilities in British Columbia, Alberta, Manitoba, Quebec and New Brunswick. The mayor has steadfastly said that the Alectra deal is not a sale and that the out of province investors are not shareholders but only receive interest on their investments.

Summarizing: Guelph city council is negotiating with a corporation that has not been in business in Ontario for a year; a corporation that has borrowed $225 million from outside Ontario for unknown reasons; there is no reconciliation of the share of Alectra that Guelph will receive. As Alectra grows in its consolidation spree, what effect does this have on Guelph’s proposed share?

Would you buy a used acr from these guys?

Fact 6 – Jobs

GS Comment – The Mayor says that Guelph Hydro employs 130. He then says 70 per cent of those people would be unaffected by the merger. Doing the math, 91 employees, chiefly the technical staff, will remain. That means 39 staffers could be vulnerable unless they want to commute to Mississauga.

Alectra says that it intends to set up a Green Power Trechnology Centre in Guelph that will create a number of good-paying jobs. Key word: “Intends.” Perhaps former Mayor Karen Fabridge may head it up as she has a lot of experience in Green Power.

These “Facts” presented by Mayor Guthrie, are not facts at all. Instead, the real facts are hidden from the owners of Guelph Hydro as final negotiations are conducted in closed-session. If and when the real financial and operational facts are made public, then council has a fiduciary reponsibility to oppose the merger.

Fact 7 – Have your say

GS Comment – It is strange why the city spending $2.36 million to convince citizens this is beneficial to them, their children and their children. It has been a designed program to influence the citizens into believing it’s a good deal, and it’s without public debate with the principals. Put it this way, when a developer applies to build an apartment building in Guelph, are not the citizens living nearby informed of the plans and the affect on the neighbourhood?

So why is this Alectra deal any different? The owners, the citizens, are deliberately being kept in the dark. The Mayor’s “Facts” do not meet the standard of transparency or public participation in the city’s business.

So why is he so convinced Council should approve this merger

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We are being fed pablum and baloney concerning the Guelph Hydro proposed merger with Alectra Inc.

By Gerry Barker

November 13, 2017

The pablum is a metaphor for our innocence and naïveté. Similarly, the baloney is the shallow approach to take over Guelph Hydro leaving out the pertinent details that justifies the Alectra Inc. merger proposal.

Confused? You are not alone.

In last Tuesday’s weekly paper, guest columnist Bob Bell, (no kin to Coun. Bob Bell), identifies himself as vice-chair of the Guelph Hydro Electric Systems Inc. In it he stated the reasons why this merger with Alectra is a win-win for the 55,000 hydro customers.

In reality, this merger proposal is more like a Chinese fortune cookie. You never know what the message is inside. That folks, is what Mr. Bell, a member of the Strategic and Options Committee (SOC), is selling. Here are some samples:

He says the SOC was “tasked by Guelph City Council” to review the options for the future of Guelph Hydro. This committee was formed in October 2016 and its mandate was to consider the sale or merger of the city-owned public utility.

Here is the fortune cookie example again. Just four months on the job, the SOC membership changed leaving only CAO Derrick Thomson and Hydro vice-chair, Bob Bell as originals. In February, a few days after the incorporation of Alectra Inc. January 31, 2017, the decision was made by the revamped SOC, to take the selling of Guelph Hydro off the table and concentrate on just merging the system.

In my opinion, this proposal was already in the oven and citizens had no information or confirmation of what the SOC and Alectra were cooking. And right now we still don’t know the details of this deal.

Here’s flashback for you: It’s June 2013 and Mayor Karen Farbridge, as chair of Guelph Municipal Holdings Inc. (GMHI), releases the 2012 annual report. In it she says that a priority of GMHI was to research the potential of merging Guelph Hydro with another municipal utility. That year GMHI lost $2 million, a figure that was not included at the time but learned later.

Well, the cookie crumbled in 2014 when Cam Guthrie defeated the mayor. Since then, the financial and managerial disaster of GMHI under the leadership of Ms. Farbridge, has taken three years to unravel, well almost.

Trying to put the GMHI Humpty-Dumpty together again

A key point pressing the GMHI wrecking crew charged with putting the pieces back together, was about the money spent by the Guelph Hydro subsidiary company, Envida Community Energy. Envida was the construction company charged with building the GMHI solar panels on public buildings, District Energy pumps and the underground thermal energy system installations. The resulting debt was transferred back to Guelph Hydro that declared a $93 million long-term debt on its books in 2016.

Keep in mind that these funds are all coming out of our pockets.

The consolidated audit of GMHI by the accounting firm KPMG confirmed this debt borrowed by GMHI included two debentures totaling $93 million but also the evaporation of $63 million in shareholder equity in GMHI.

Yep! It all comes out of our pockets.

It remains possibly the worse financial meltdown in the city’s history.

Now, the mayor is pushing to join our Hydro distribution system with an organization of dubious credibility and no financial track record.

Guelph Speaks has learned that even by giving Alectra its $228.4 million in installed transmission equipment, apparently Alectra will not assume that $93 million debt.

As both parties, Alectra and Guelph city council, munch through the fortune cookies, Chairman Bob Bell spins a yarn of possibilities, promises and assumptions. Comparing this proposal is nothing but a sales pitch, not fact-based for responsible consideration.

Note: On Thursday November 16, guelphspeaks will publish the 2,600 word neutral dissection of the proposed Alectra merger. Energy lawyer Jay Shepherd, of Toronto, writes an open letter to Guelph residents. He explains details of the problems facing mergers of Ontario’s municipally-owned power distribution corporations.

It’s a factual assessment that should clarify the unknown facts about this merger deal. His conclusion is interesting.

Mr. Bell writes that Alectra will bring “reliable services maintaining local jobs, investing in the community and focusing on environmental sustainability as top priorities.”

But isn’t that what Guelph Hydro does now?

Then the Bell guest column goes on to say: ”That after careful review of all options, “the committee recommended to Guelph city council that Guelph Hydro merge with Alectra.”

That’s it? Are we out of cookies?

When the people’s business is done behind closed doors

The first thing we have to remember is that the SOC and city council meetings are conducted in closed-session. What is preventing city council or SOC to openly reveal their “careful review” of all options for supporting this merger?

Mr. Bell claims that the city will still retain ownership of Guelph Hydro. “Under the proposal, the City of Guelph will join 15 other Ontario municipalities owning a share of the electric utility (Alectra). This means that our city council will continue to have an ownership stake and receive dividends each year. Given that the City of Guelph will own a share of a larger utility, these annual returns are expected to increase.”

That sounds like another “expected” promise that is as hollow as the entire article as published.

The Alectra team is throwing the book at citizens using a fancy website, expensive brochure and phone survey. The campaign’s so-called public information sessions across the city carefully set up to not allow questions to be asked by the principals. The entire exercise to persuade citizen, read that the 13 members of council, who represent the people is a mockery and insult to the populace.

The cost that we are paying for this give away to Alectra has already been established by the city to be $2.36 million. Just to be sure of this, we are paying the promotional costs of this attempt to take-over Guelph Hydro.

Does this make any sense to you?

The Alectra campaign leaves out the thousands of residents who are not social media savvy but are dependent on electricity. This includes the elderly, disabled, the working poor and those confined in retirement and nursing homes.

Look at it this way: Guelph Hydro sends out 55,000 bills a month chiefly through snail mail. Here is an inexpensive way to inform all the customers of the details of this proposal. Nope. Instead, this Alectra sales campaign is focused on the electronic media.

The response was that the dividends that Guelph Hydro pays the city annually would finance the Alectra pitch. But didn’t that money come from the citizens who pay their hydro bill?

Alectra says the board of directors will each receive $25,000 plus $2,500 for each board meeting they attend. The company says that the directors “honourarium” is expected to increase to $35,000.

That sounds like the good jobs claim start   a at the top of the organization.

It hurts me when I laugh at irrational behaviour

The Baloney Scale 1: If city council approves the proposal, Guelph will lose control of Guelph Hydro. So at this stage, just 27 days left, citizens remain in the dark because of the secrecy associated with the negotiations. There is no recourse to exit this merger once council approves it.

Baloney Scale 2:

Guelph Hydro’s entry fee into the Alectra consortium is transferring all its assets to Alectra with no compensation. Oh! There is one caveat. Alectra will not assume Guelph Hydro’s long-term debt of $93 million.

In summary, we give away our Guelph Hydro system to Alectra and in return receive an undisclosed interest in a large corporation with a short-term financial record?

Who is negotiating this deal, Bernie Madoff?

I think I’ll toss my cookies if this cock-eyed deal is approved by city council.

 

Please Note: There is a group of concerned citizens who oppose this merger. Any resident of Guelph, 18 years or older can sign the petition to be presented to Council before the December 13 meeting to approve or reject the merger. Please send your name, address and ward in which you reside to gerrybarker76@gmail.com. Your name will be added to the petition. Volunteers willing to participate in collecting names are most welcome. As the project develops read guelphspeaks.ca for further information.

Never underestimate the power of the people.

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For a kiss and a promise, we may give Guelph Hydro away to Alectra Inc.

By Gerry Barker

November 6, 2017

Editor’s note: The following is an analysis of what we don’t know about the proposal to dispose our ownership of Guelph Hydro and to receive an undisclosed percentage of Alectra’s profits. Also, we reproduce the content of the “energize tomorrow.ca” website that fails to report the financial details of this transaction but spells out the claimed benefits to the citizen of Guelph. Finally read the pertinent question the administration should clearly provide what’s in it for all citizens. There is a lot of material here but hopefully asks the questions involving a multi-million dollar disposal of our property.

*            *            *            *

What the administration won’t tell you about the Great Guelph Hydro Giveaway

You know with 13 expert communicators in city hall, why are the citizens being fed a load of promises but no proof of completion? The entire Alectra Inc. proposal is being conducted on the Internet in a website starring our Mayor Cam Guthrie.

Why hasn’t the city sent a detailed written explanation of this proposal to all 55,000 Guelph Hydro customers? There are thousands of people in the city who do not own or know how to operate a computer. Maybe that’s part of the strategy to convince people to give Guelph Hydro away, but for what and how much?

Instead, we are told to check out the “energizing tomorrow.ca” website to help us understand a distribution system valued at $228.4 million hand over to a corporation. The recipient is Alectra Inc. that has only been incorporated and applying its business for less than ten months.

Or has it?

When asked about the Guelph Hydro’s distribution system, the answer was that the citizens would no longer own it. That would be the cost of joining Alectra. Poof! Gon! Gone without any explanation about the percentage of ownership we would receive from membership in Alectra. It has yet to be agreed and approved by council although a memorandum of agreement has been reached.

This is no small transaction and it is fraught with promises, but no hard numbers, about the benefits to the Guelph Hydro customers.

Oh! There’s a lot of contrived puffery in the Alectra takeover comparison site, paid by the taxpayers of Guelph through the Strategic Options Committee (SOC). It is a question that deserves an answer. We do know that the SOC hired a consultant last year to pave the way for this tainted takeover plan. As the SOC was part of GMHI that has no money, the city has to pick up the tab. And I will bet that consultant, when his bill is presented, will be a doozy. The cost of just creating this elegant P.R. production is in the thousands of dollars.

As the old lady in the Burger King said a few years ago: “Where’s the beef?”

The beef friends lies in the numbers that are absent from this glossy website.

As a public service for those who are not computer savvy, let’s review the online comparison copy with appropriate Guelph Speaks comment.

Here’s the opening statement, assumed to have been written by the Public Relations consultant hired more than a year ago, to persuade us to go along with dumping Guelph Hydro. It can only be described as a “Galaxy far, far away.”

Why is a Guelph Hydro-Alectra merger the preferred option?

Here’s how a Guelph Hydro-Alectra partnership is expected to benefit residents and businesses in Guelph and Rockwood.

“Sell the sizzle, not the steak.” It’s the same old story, promoted for years in the advertising business:

Remember that this is the second attempt by city council, led by the Mayor in 2008, to sell Guelph Hydro. This sale material and planning is more precise than nine years ago. It remains a sell-out of our reliable, well run, progressive and profitable organization.

For five years, Guelph Hydro was abused by the former administration’s asset holding company, Guelph Municipal Holdings Inc., to advance the green power environmental movement’s attempts to stop climate change. It was a costly, mismanaged attempt and this refined version is promising pretty well the same thing. As an aside, I know that Guelph has a climate change office and Alectra promises to co-operate with it.

When you lift up the rug, you never know what’s going on under there.

How many times do the citizens have to get kicked in the shins to be forced into a Guelph Hydro takeover that the greater majority don’t need and doesn’t want? The Mayor and Alectra claim that the citizens are in favour with the public reaction they have artificially generated to push this plan to completion.

I beg to differ. Let’s see the merger financial package before committing ourselves.

Let’s review the five categories contained in the “energizing tomorrow.ca” website that compares joining Alectra or Maintaining Guelph Hydro’s status quo.

  1. Rates

            Merger with Alectra

  • A merger helps keeps rates lower than standing alone, with more savings expected in the years to come.
  • Merging Guelph Hydro with Alectra would help keep downward pressure on rates for at least 10 years.
  • After 10 years, customers would save even more when rates are aligned across Alectra’s high-density, urban, and growing customer base.
  • Guelph and Rockwood customers benefit from previous merger savings and avoid typical rate increases.

            Maintain Full Ownership

  • No change to expected rate increases.
  • Customers would be exposed to Guelph Hydro’s typical rate increases in 2021 and 2026
  • Efficiencies limited to existing operations,

GS comment – Electricity rates in Ontario are set by the provincial government agency in charge of power generation. To suggest that our power rates would be lower is not in Alectra’s control. For example, The Wynne government has introduced a 25 per cent power rate reduction for five years by 2021, according to the provincial Auditor General; the rates will climb to pay for the loss of revenue in the previous five years. How can Alectra say rates will be lower than they are now? Economy of scale is their supposition. More sizzle than substance.

  1. Service and Reliability

            Merger with Alectra

  • Customer service, reliability and response times would be the same or better than they are today.
  • Local crews would respond to local outages and receive support from a large, highly-skilled team during severe storms or emergencies.
  • Alectra’s larger scale and focus on innovation could improve local performance and responsiveness.

            Maintain Full Ownership

  • Guelph Hydro would continue delivering excellent service.
  • Customers in Guelph and Rockwood would continue relying on a 24/7 control room; a technical call centre and 24/7 access to customer self-service.
  • The company would meet its capital investment needs for core operation and government funding for additional capital funds.

GS comment – Okay here’s a question for you. Guelph is growing and new developments are being approved and built. Now, if this sale goes through and citizens lose control of the utility, who pays for system expansion to provide power to the new developments? If, as we have been told, that the Guelph system will be turned over to Alectra, do they pay? How does this affect development growth in the city because the city must assure developers that water services and power will be provided to their site as part of the subdivision agreement. Regardless, Alectra will have to agree to the development because they are responsible to deliver those services.

  1. Community Planning

            Merger with Alectra

  • As the first utility in Southwestern Ontario to merge with Alectra, Guelph Hydro’s current headquarters would become a regional operations hub.
  • Increased annual dividends mean the City would have more money to invest back into our community.
  • A Guelph Hydro-Alectra merger would enhance Guelph’s ability to advocate for local interests among regulators, industry and other levels of government.
  • Guelph would share decision-making authority with other municipal shareholders.

            Maintain Full Ownership

  • Guelph-centric innovation, community planning, and economic development strategies would continue.
  • Guelph Hydro could pursue partnerships and government funding for additional capital funds.

GS Comment – It appears that Alectra’s claim that Guelph would be the ‘Hub” for Alectra’s expansion into southwestern Ontario, has no direct benefit to Guelph Hydro’s 55,000 customers. Similarly, Guelph Hydro is quite capable of dealing with regulators, industry and other levels of government, just as it has for 100 years. Again there is no tangible evidence provided by Alectra of how this so-called merger will benefit Guelph Hydro’s customers. Why? To justify completing this deal Alectra is not providing the financial details about its company. The effect of expanding the Alectra controlled Network is not addressed. What is the impact on Guelph’s alleged share of Alectra profits when additional municipal distribution companies join the Alectra consortium?

  1. Environment and Innovation
  • Merger with Alectra
  • Both Guelph Hydro and Alectra Utilities are focused on conservation, renewable energy, and environmental sustainability.
  • Alectra Utilities would invest in local infrastructure and establish a Green Energy and Technology Centre (GRE&T) in Guelph; a hub for green technology development.
  • Alectra would work closely with the City’s Climate Change office on local mitigation and adaptation efforts.
  • Maintain Full Ownership
  • Guelph Hydro would continue to focus on conservation and support for local renewable energy projects.
  • Ability to invest in new technology or modern services may be limited unless City of Guelph invests further capital or allows dividends to be impacted.

GS Comment – It may come as some surprise to Alectra that the citizens of Guelph just experienced the losses caused by recent devastating miscalculation experiments in creating sustainable power by the previous administration. The zeal to try it again without any control is something you may not have noticed when carrying out the offer to merge with Guelph Hydro. The loss was in the millions and never can be recovered. In my opinion, the last thing we need right now is yet another attempt to create a connection that we don’t need. Why should we give away our distribution system to a corporation that makes similar promises to provide cheaper and better technology in electric supply and distribution?

  1. Local Jobs

            Merger with Alectra

  • Good paying jobs would stay in our community, and new jobs would be created as part of the Green Energy and Technology Centre.
  • Alectra is a municipally-owned utility with a caring, respectful employee culture.
  • No personnel decisions have been made. If necessary, there would be natural attrition and voluntary separation wherever possible.
  • *            *            *            *

            Maintain Full Ownership

  • All operations would remain in Guelph.
  • Some job creation would be sought through Guelph-centric innovation strategy.

GS Comment – To refer to Alectra as municipally-owned is a misrepresentation of the facts. The parts of this Alectra network are formerly municipally-owned but are now controlled by the Board of Directors of Alectra Inc. It is a private corporation that artfully predicts great things for Guelph, including lower power rates and good-paying jobs. Alectra promises more money to the city from its tiny share of the Alectra corporate profits, more jobs but no assurances to maintain the highly skilled staff of Guelph Hydro. Here’s one prediction. The most vulnerable is the administrative staff of Guelph Hydro, as their jobs will gradually disappear as Alectra transfers the jobs to its Mississauga headquarters on Derry Road. In view of these claims and promises, why are we prepared to give away our hydro system and receive any financial information about the company that wants our power distribution system? Does that sound like a good deal to you?

I have been around long enough to see a snow job by Alectra to takeover Guelph Hydro without paying for the $228.4 million worth of poles, wires, substations, the utility’s posh headquarters and equipment.

In return it has been suggested that Alectra will appoint Mayor Guthrie to the Board of Directors. If so, what are the financial terms of his membership?

We are being treated like small-time pawns in Alectra Inc.’s grand corporate mission to control a huge chunk of electric power distribution in Ontario. The icing on the cake with Guelph is to promise the city will be Alectra’s hub for southwestern Ontario’s expansion and, Tah Dah! Building a green power technology centre right here in river city.

This deal promises little to benefit Guelph’s 55,000 power customers. But it has the potential to be the dumbest mistake a city can make in say, five or ten years from now?

Once council approves this deal it can never by changed. That curtain is descending.

When Alectra provides audited statements of the effect of lower rates to its 44 curent clients in Ontario, then some credibility will be injected into this proposal.

Sell or Merge Guelph Hydro, or should we walk away?

The following are important questions that need answers by the administration before approving the merger of Guelph Hydro and Alectra Inc. They are based on the secrecy and reasonable duu dilligence employed by the SOC and city council in creating this project that wille force the loss of control over our power distribution asset.

*            How deep did the Strategic Options Committee’s (SOC) due diligence go?

*            Former SOC member Richard Puccini, writing in the local weekly, claimed there should be at least two other bidders to buy Guelph Hydro. Is this true?

*            Why did the SOC’s original schedule concluding in March 2018, of investigating and negotiating potential partners, ignore its timetable as reported to council in 2016?

*            Why did the SOC take consideration of all potential sale of Guelph Hydro off the table last February?

*            Why is the City of Guelph agreeing to give Guelph Hydro’s $228.4 million installed assets to Alectra in return for what?

*            Why should citizens agree to a merger with Alectra Inc. for a promised estimated return of four to five per cent when Guelph Hydro had a net profit last year of $7 million?

*            Has the City of Guelph, through its wholly owned subsidiary, GMHI, engaged a lawyer(s) to oversee this agreement and proposal?

*            Has the City of Guelph engaged its auditor KPMG to oversee the proposal and offer its opinion as to the benefits to the citizens?

*            Is it true that to date, this merger proposal has cost the city $1.5 million?

*            Why hasn’t the SOC told citizens of the advantages of selling the utility or merging it with a network operated by Alectra Inc?

*            Did the SOC interview civic official members of the Alectra consortium to reveal their experience dealing with Alectra?

*            Did the SOC receive and review financial and operational data regarding Alectra Inc? This includes corporate structure, governance, details of senior staff including compensation, Revenues and Expenses, debt, banking sources, current share breakdown? What are the liabilities, name of corporate auditor and legal advisors, and did the SOC receive a detailed copy of the Alectra Inc. business plan?

*            Did the SOC receive a written proposal from Alectra Inc that outlined the legal and estimated merger details of the alleged agreement and the specific benefits to the City of Guelph? If so, why hasn’t the city revealed the proposal?

*            Why hasn’t the city administration revealed the memorandum of agreement apparently signed by the Mayor and Chief Administrative Officer, Derrick Thomson, as co-chair of the SOC along with Jane Armstrong, chair of Guelph Hydro?

*            What protections of the citizens of Guelph exists in the event of Alectra’s bankruptcy, unusual technical and weather related power stoppages, arbitrary changes in the agreement that are detrimental to the City of Guelph, arbitrary changes in the governance and the original business plan?

*            Has Alectra offered any compensation to members of city council, the SOC or Guelph Hydro to obtain approval of this proposal?

*            Truth to tell, the city administration will not answer many of these questions on the grounds that they allegedly expose private proprietary information of the Alectra Inc’s. corporate organization.

*            If this excuse is used, it only reinforces the generally held belief that this is not a good deal for the citizens of Guelph, owners of Guelph Hydro.

We remain convinced that there is a lack of due diligence and this proposal should be rejected and reconsidered later when Alectra is ready to supply applicable audited financial information that backs up their proposal and its promises.

 

 

 

 

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