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