By Gerry Barker
June 25, 2018
Remember last December 13 when Guelph city council approved merging Guelph Hydro with Alectra utilities, a subsidiary of Alectra Inc?
Well it turns out that the Town of Collingwood had a six-year partnership with an outfit called PowerStream. This corporate entity of that operate, PowerStream, is also the power distribution system in Mississauga wholly owned by Alectra Inc.
In 2012, PowerStream purchased a 50 per cent interest in Collingwood utilities operating the power distribution and water system for Collingwood known as Collus (Collingwood Utility Services Corp.) At the time Mayor Sandra Cooper along with the head of the Utilities Corporation told council that PowerStream was paying $15 million for 50 per cent of the utility.
In a separate issue revealed later, the mayor’s brother, former Liberal MP Paul Bonwick, was working with PowerStream plus other companies doing business with the town.
Citizens complained about Paul Bonwick’s involvement with PowerStream, who was hired on a monthly basis by the acquiring corporation. In January 2012, PowerStream successfully bought a 50 per cent share of Collingwood’s public utility company, Collus, for $15 million allegedly.
Acting town CAO, Ed Houghton, told CBC News that PowerStream’s projected growth and “recapitalization and debt to equity ratio” promised a better long-term return for taxpayers, and noted the sale was approved by an 8-0 vote by council.
Does this sound familiar?
Didn’t Alectra make a similar pitch to Guelph city council last December with adjustments for technical blue-sky changes in power distribution?
Our guys fell for the pitch by Alectra voting 10-3 to accept the draft agreement.
The big difference between Collinwood’s experiences dealing with PowerStream aka Alectra is that they were allegedly paid for half of the Collus operations.
What did Guelph get for giving Guelph Hydro away?
Following the February 27, 2018 town council meeting, the CBC reported that lawyer William McDowell, hired by the town, outlined how a judicial inquiry could help answer who benefited from the sale, potential conflicts and where the money from the sale went.
At the sane meeting, Collingwood town council voted to invoke a rarely used section of Ontario’s Municipal Act to set up a formal judicial inquiry into the 2012 sale to PowerStream of a 50 per cent stake in the Collingwood Utilities Corp.
Complaints of citizens prompted an investigation by the Ontario Provincial Police. To date no charges have been laid.
That $15 million price, as it turned out, was never paid and the town received only $8 million.
Then, PowerStream offered to purchase the 50 percent of Collus stock it did not own for an alleged $13 million.
The February 27 meeting of town council voted 5-1 to launch a judicial inquiry with Mayor Cooper the only dissenter.
In November 2017, PowerStream, now known as Alectra Inc. the corporate owner of 50 per cent of Collus, said it would sell its shares back to the town in a buy-sell agreement.
Norm Loberg, chairman of Alectra Inc. said: “Working closely with the excellent staff at the utility, we were able to improve reliability, enhance service and offer a broader selection of conservation programs.”
It was a similar comment he made to Guelph city council last December only the promise to establish a Green Technology Centre in the former Guelph Hydro headquarters differed from the Collingwood statement.
So if what Loberg tells Collingwood council is true, why do they want to sell their interest back to the town?
Further, why three months later is the town prepared to launch a judicial inquiry into the original purchase of the utility and the six years of partnership with Alectra?
Deputy Mayor, Brian Sauderson, who voted for the inquiry said: “”Who benefited? If things were done in such a way that people benefited, then people in this community need to know.”
Is there a message here for Guelph city council?
The merger of Guelph Hydro with Alectra Utilities poses a similar series of questions in its impending deal now before the Ontario Energy Board (OEB).
In 2012, Collingwood at least sold a 50 per cent share in its Collus for $8 million.
Heck, that’s chump change comparing the giveaway of Guelph Hydro worth an estimated $300 million.
Who benefits from this merger? Is it the 55,000 owners of Guelph Hydro who have been paying their bills and supporting the growth of the City and Rockwood?
Read the words of the Alectra Chairman above. Should we feel comforted that city council is giving away our reliable, efficient, profitable and highly rated utility for the promise of a 4.36 per cent annual dividend of Alectra Utilities’ profit … but only 60 per cent of its profit?
Does that make sense to you?
There are 19 documents in the written Alectra proposal to the OEB. Some of the material is redacted on the alleged ground it contains proprietary information about Alectra.
The final insult to our collective intelligence perpetrated by city council was the last minute revelation that the city was going to receive a “special dividend” of $18.5 million.
To juice the merger deal just before the vote, city council agreed to pay us back with our own money! Those funds are coming from Guelph Hydro’s cash reserves. That’s public property.
This exercise has already cost the city $2.4 million just to perform its lame dog and pony show to convince we peasants that this is a great deal.
We can learn from the Collingwood experience dealing with Alectra.
Perhaps council should rethink its position in approving this merger. It’s still not too late as the OEB hearing may not even be held this year. There are citizens who have been approved as interveners.
Despite the closed-session meetings of the Strategies and Option committee, appointed by council, it may turn out to be a monumental political blunder come next October.
We all know what happened in 2014 when the people voted.
As an aside, there were more than 6,000 votes cast online in the advance poll four years ago. But the present council voted not to allow online voting this year.