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 firstname.lastname@example.org. 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.