By Gerry Barker
December 18, 2917
Here is the anatomy of a $300 million Guelph Hydro giveaway when a lobotomy was needed.
Make no mistake, from the day the Strategies and Options Committee (SOC) was formed by council in 2016, the plan was to merge Guelph Hydro not sell it. When I asked the Mayor why there were no elected councillors on the committee. He replied: “Using a skills-based team is the most appropriate way to conduct this type of asset review.” Appropriate for whom?
Wednesday night was crucial for council to approve the merger. The majority voted to approve the merger knowing there was no looking back, no second chance to reconsider. Guelph now faces losing control, sold out its Hydro employees, all for receiving 4.63 per cent of 60 per cent of Alectra’s profits.
The Ontario Energy Board (OEB) must approve the final agreement. Closing the merger is expected to follow the OEB approval and the brand, Guelph Hydro, will disappear before the end of 2018.
The citizens have the right to object to the merger before the OEB.
The approved draft agreement, supported by ten councillors out of 13, allowed the city, through its defunct Guelph Municipal Holding Inc. (GMHI), one member on the 14-member Alectra Board of Directors, but not the Mayor or acouncillor.
Not only were there no elected officials on the SOC, but also council agreed to merge with Alectra without knowing the details of the final agreement, according to the Toronto-based Aird and Berlis lawyer, representing the City of Guelph. The lawyer warned council that if they approved the merger there was no reversing the approval.
The majority of council ignored his caution.
Names of the ten councillors who voted to give Guelph Hydro away
June Hofland, Mike Salisbury, Christine Billings, Cathy Downer, Karl Wettstein, Leanne Piper, Dan Gibson, Andy Van Hellemond, Mark MacKinnon and Mayor Guthrie.
They ignored the clear evidence that this merger was being rushed. They ignored that there was no rational benefit to the 55,000 Guelph Hydro customers. They ignored the methodology of secretly conducting the investigation over almost a year, beyond any real public participation.
Those ten councillors also ignored several appeals by concerned citizens to defer the decision until the final version of the agreement was revealed and debated. They denied the demand for a referendum to be held as part of the civic election in October next year.
Just for those reasons alone, they will be remembered as the gang that couldn’t shoot straight when logic escaped their judgment.
Here are the three councillors who voted against the merger: James Gordon, Phil Allt and Bob Bell. Apparently, these three representatives of the people had the courage to see through this hazy proposal that was nothing but a sales pitch to get control of Guelph Hydro without paying for it.
That is the essence of this merger that was planned and executed only in the interests of Alectra.
Council was used and subsequently believed that the future of Guelph Hydro was more important than the reality that the utility was a jewel that had great value to make a fair agreement on its terms, not that of Alectra.
The beginning of the march toward Guelph Hydro’s Waterloo
The SOC was formed by city council October 24, 2016 composed of Derrick Thomson, the newly appointed Chief Executive Officer of the City of Guelph, Pankaj Sardana, Chief Executive Officer of Guelph Hydro, who both acted as co-chairs of the committee. Also Robert Bell, Mark Goldberg and Richard Puccini were appointed to the SOC.
According to the news release, the SOC was charged to investigate and recommend opportunities related to maintaining the status quo as a standalone municipally-owned electricity distribution system (acronym LDC), or making a change, which could include buying, selling or merging.
The SOC provided council with a timetable of four phases of their preliminary investigations that would be completed in “early 2017.”
As it turned out, February 2017 was pivotal when the SOC mandate of selling Guelph Hydro, was removed as an option.
The plot thickens
Here is a coincidental series of events that occurred. Alectra Inc. was incorporated January 31, 2017.
The SOC committee personnel changed with Mr. Puccini stepping down. Hydro Chair Jane Armstrong replaced Co-Chair Pankaj Sardana and a Mr. Ault replaced Mr. Puccini.
A council meeting was held February 15, 2017 in which a motion was passed to drop the sale of Guelph Hydro as an option to consider. The vote was 7 to 5. This cleared the deck to only consider a merger with another utility.
On what advice or basis did council at this point make the decision?
Did the SOC recommend to city council to drop this option? Someone did, and the timing, two weeks after the Alectra incorporation opened the door for Alectra to craft a merger proposal that was not made public until October 18, 2017.
That was eight months after the decision not to sell Guelph Hydro.
Here is part of a report published October 25, 2016 in the Guelph Mercury that outlined the SOC’s committed task:
- Consulting with stakeholders;
- Investigating transaction options and approach; and
- Reporting to Council on recommended options and seeking Council’s direction on next steps.
Let’s talk about the claim of “consulting with the stakeholders.” The SOC, to the best of my memory, held all it’s meetings in closed-session including those with city council. With Mr. Thomson as Co-Chair of the SOC and the CAO, it’s difficult to know what information he passed to his staff and council.
After the Alectra merger announcement by the Mayor October 18, the city staff recommended approving the merger. Why would they do anything different? Their boss was the SOC Co-Chair and CAO of the city?
In that position, Mr. Thomson was effectively in control of the process along with his new Co-Chair, Jane Armstrong. Did either of them convince council to remove the Hydro sale option from consideration? As CAO, Mr. Thomson, wearing two hats, was positioned to be a major influence in recommending the dropping of the sale option.
The mystery exists. Who motivated council to eliminate the sale option February 15, 2017?
Given council’s majority of ten approving the merger, it is apparent many were out of the loop in understanding the effect of that decision although five councillors voted against removing the sale option last February.
We later learned that Mr. Puccini was not happy about the move and indicated that he was in favour of a sale of Guelph Hydro. His address to council the night of the approval meeting to decide the future of Guelph Hydro, was that he offered details of the benefits of selling the utility based on empirical evidenced of similar transactions in the LDC field.
Timing the rollout to curtail opposition
In my opinion, this was a carefully planned decision to merge with Alectra and targeted only at the 13 elected members of council. They had control and any opposition was blunted by deliberate release of some of the proposed merger agreement details just 12 days before the crucial council meeting last Wednesday.
Let’s talk about the possible incentives offered to certain members of council and possibly the SOC.
Why did this campaign to influence 13 members of council to approve an agreement that contained no substance, no tangible benefits to the Guelph Hydro customers and, most of all, the exercise was mostly conducted in secret. The council held a one hour closed-session right before the public meeting. Why was that necessary?
Some 29 delegates spoke at that meeting with 22 opposed and seven recommending the merger.
Of the seven, two were Alectra senior executives; a Brampton Alectra employee extolling how fair Alectra was to its employees; a VP representing Pearson International Airport saying how well Alectra performed its maintenance of the 40 megawatts facility; a steward of the Power Worker’s of Ontario that is attempting to take over as bargaining union of Guelph Hydro, and two representatives from Barrie, the mayor and a councillor saying how well the take over by Alectra has worked well with that city.
Their job was to reinforce the message to take over Guelph Hydro and, unfortunately it worked.
Councillors were briefed November 30, the day before the public release of the 245-page agreement report. The next day it was released and was only available Online.
It was a part of a strategy to deny the 55,000 customers of Guelph Hydro their right to see the completed signed document before the December 13 approval meeting. Councillors were also briefed the two days before D-Day in closed-sessions with Hydro CEO Pankaj Sardana.
It is mindful of a George Orwell novel in which the people were tightly controlled by the authoritarian authority and only received information that favoured the controlling class.
In my opinion, this turkey was hatched long before the Hydro customers had any say.
That friends, is dictatorship not a democracy. And there is no comfort to be gained when we are told that Guelph citizens paid $2.36 million to sell this deal with the bulk of it going the lawyer and accounting firms. Those public funds financed the Alectra deal.
So why? Why would ten members of council vote for this merger that has not only cost us $2.36 million but agreeing to give a $300 million asset in return for 4.63 per cent of only 60 per cent of Alectra’s profits with no firm numbers attached?
Why not top it off with a gift of $18.5 million from Guelph Hydro?
The final insult to the citizens who own Guelph Hydro was the $18.5 million “special dividend” that Guelph Hydro will pay the city when the deal closes in a year. That’s our money taken from a $22 million surplus of Guelph Hydro.
The council members who voted to give Guelph Hydro away, Mayor Guthrie denies it, saying: “We are not giving anything away.” Perhaps the Mayor did not understand the drastic step of giving away its publicly owned utility to a private corporation for a tiny interest in that corporation in the name of progress.
We should be interested learning about the two Tesla electricity storage sytems installed in Guelph as the Mauor has stated. Who owns these two sytems and where are they located?
Even though they cannot change their decision, next October those ten councillors will be asked to explain their decision during the civic election campaign.
That is if they choose re-election.
They are the gatekeepers of the city business, providing the checks and balances to maintain the trust that the citizens have placed in them. Instead they fell for a sales pitch to dump our treasured asset for a bunch of promises that have yet to be proven.
The damage is done now.
They don’t realize that from now on, the citizens will never trust them. They were professionally sucker-punched by experts and failed in their job to protect the stakeholder’s interests.
Were they naive?
Did powerful interests seduce them into believing the proposal was the best solution for the future of Guelph Hydro?
Or are they just bad listeners?
It doesn’t matter now; they fixed it so there’s no looking back.
Our only hope is to mobilize and make a case to lobby the OEB to reject this merger.
In my opinion, those ten councillors will eventually have to apologize for the their actions.
History can be so unforgiving.