By Gerry Barker
August 13, 2018
As many viewers know, guelphspeaks.ca has been a severe critic of the proposed merger between Guelph Hydro and Alectra Inc, the parent corporation of Alectra Utilities.
I call it the steal of the century.
The onus of this multi-million dollar giveaway lies with those 10 members of council who, on December 13 2017, voted to approve the merger. The truth, as it is gradually coming out, is that the council majority had already taken the bait and decided to approve the complex deal months before it took shape.
Despite late hour protests by citizens, including 22 who appeared before council expressing the need for more truthfulness, clarity and delay until the people understood what was at stake. Protests denied.
We have yet to be told how much GMHI cost the city over five years.
What did ten councillors know that we didn’t?
As a public service, here are the names of the ten: Mayor Cam Guthrie, Councillors Dan Gibson, Andy Van Hellemond, June Hofland, Mike Salisbury, Christine Billings, Leanne Piper, Cathy Downer, Mark Mackinnon, Karl Wettstein.
Councillors Phil Allt, James Gordon and Bob Bell voted against the approval.
In my opinion, there is no public record of discussions by members of council to accept the terms and considerations of this merger. The public, those people who actually own Guelph Hydro, were totally ignored by the majority of council in making the decision to merge with Alectra Inc.
So what is the truth and consequence of this decision? In my opinion, it was a conspiracy to bail out the multi-million dollar financial losses incurred by the former administration operating Guelph Municipal Holdings Inc. (GMHI) that included Guelph Hydro.
It took more than a year to finally be told the extent of the failed GMHI scheme.
Those losses and wasted resources were a stain on the city’s account books. The council realized that not even the financial resources including the credit rating of the Corporation of the City of Guelph could sustain and repay the losses.
Since early 2015, the administration has quietly worked behind the scenes with accountants and lawyers to extricate itself from the GMHI disaster in creating a system of power self sufficiency and incorporating it with a geo-thermal hot and cold water delivery to a small number of to commercial and hi-rise residences.
City council was frequently blinded as GMHI business was conducted in closed sessions for more than four years. The public, including this writer, had no clue as to what GMHI was doing.
That is, until May 16, 2016 when Chief Administrative officer, Ann Pappert signed a report along with CEO of GMHI Panaj Sardana, that revealed parts of the looming scandal that would have a disastrous impact on the city’s finances.
In mid-July 2016, a staff report provided additional information that gave more insight into what had occurred in the five years that GMHI operated in almost complete secrecy.
The plans created under the leadership of former Mayor, Karen Farbridge, were flawed and executed without the proper and necessary checks and balances.
Until the May 16 report there were many people, city staff and elected officials, who knew what was unfolding and never said a word.
Let’s be frank, this could not have happened without the support and loyalty to the former mayor. Included were key staff members and some councillors who served on the GMHI board of directors. These included Lise Burcher, June Hofland, Karl Wettstein and Todd Dennis. Wettstein is not a candidate this year, Hofland and Burcher are candidates and Mr. Dennis is no longer associated with council.
It is important to note that former CAO Ann Pappert was also the Chief Executive Officer of GMHI for four years. The closed session meeting of council December 10, 2015 was when the four senior managers received the salary and bonus payments totaling $98,202. Ms. Pappert, Deputy Chief Administrative Officers Derrick Thomson, Al Horsman and Mark Amorosi were knowledgeable of the GMHI operations and problems.
Today only Derrick Thomson remains with the city as CAO although he resigned in January 2016 to take another position then returned in June to take over as CAO.
Not one of those councillors associated with GMHI, spoke up about the GMHI operations. In my opinion, they committed the highest form of dereliction of their sworn fiduciary responsibility. In fact, they were all paid extra for participating on the GMHI Board.
Coun. Karl Wettstein declined to participate during a council meeting discussing the GMHI situation on the grounds that because he received remuneration for his membership on the GMHI board, he declared a perceived conflict of interest based of his financial connection.
But that didn’t stop Coun. June Hofland and Mr. Wettstein from voting for the merger of Guelph Hydro.
The extraordinary part of approving the merger is that those ten councillrs couldn’t have known what they were approving. The agreement was still being negotiated and it wasn’t completed until February, this year. That’s when a written proposal, containing 19 documents was available on request. Some of which had major redactions, Alectra Inc. and Guelph Hydro presented it to the Ontario Energy Board for approval.
No date has been set for the OEB to conduct a hearing and make its decision. There are four interveners who will ask the OEB to reject the proposal. A spokesperson for the board estimated that the hearing will not be held for up to 12 months.
Based on that statement, no decision will be made before the October civic election.
Entering from Stage Left, the SOC
The framework for this abortive, agreement hatched for the most part in closed sessions, was created in the fall of 2016 by the council-appointed Strategies and Options Committee aka SOC. It was originally co-chaired by Chief Administrative Officer Derrick Thomson and Guelph Hydro Chief Executive Officer Pankaj Sardana. There were three other members on the committee who we’ll call civilians.
There were no elected officials on the committee.
The structure of the SOC changed as Hydro Chair Jane Armstrong replaced Mr. Sardana. Two other members were replaced. This change occurred prior to February 2017 when council made a major decision, in open session, to remove the option of selling Guelph Hydro from further discussion or negotiation.
So why was council told to dump the option of selling the $300 million profitable, publicly-owned power distribution systems serving 55,000 customers?
I have learned that there were at least two neighbouring municipalities that expressed an interest in buying Guelph Hydro. Because this was discussed behind closed doors, we’ll never be told who they were.
The reason that the SOC was instructed to stop selling the crown jewel of Guelph remains a great, untold story of backroom intrigue and arm-twisting.
But the reason is clear that the massive debt accumulated by the Guelph Municipal Holdings Inc., along with Guelph Hydro, chaired by the former mayor, had to be dealt with on the city books.
For the record, this merger is to get rid of that debt by giving away Guelph Hydro and its assets to Alectra Inc for almost nothing. You don’t have to hold a PhD in accounting to figure this out.
How did the city get out of this hole created by a former administration without borrowing money from a recognized lender such as a bank or credit union?
Welcome to Trader Joe’s
The answer friends is they made a deal with the devil and traded Guelph Hydro and all its functioning assets to Alectra for a tiny share of Alectra Utilities’ profits of just 4.36 per cent but only sharing in 60 per cent of Alectra Utilities profits.
Voila! The trade kicks the accumulated debt of Guelph Hydro controlled by GMHI. The merger agreement states:
“The purchase by Alectra Inc. of all the issues and outstanding shares of Guelph Hydro held by Guelph Municipal Holdings Inc. a wholly owned corporation of the City of Guelph.”
It’s important to note that Alectra Utilities is a subsidiary of Alectra Inc. This corporation is the so-called “purchaser” but Guelph only shares in the profits of its ubsidiary corporation.
Here’s the brutal truth. Alectra Inc. once approved as the new owner of Guelph Hydro, is dropping that brand name as soon as the OEB approves the merger. Here’s another possibility, Alectra Inc. can sell the assets of Guelph Hydro to the highest bidder and walk away with millions.
Mayor Guthrie keeps saying that the city is giving nothing away when asked about the proposed merger.
Did you know that the city admits it has spent YTD some $2.6 million of your money to sell this deal to us. The head of the city’s communications department was the key driver of the campaign to convince us with slanted polls and town halls where few people turned up.
Then just before the vote to approve the merger, the city announced that it was receiving an $18.5 million “special dividend” from Guelph Hydro as soon ad the deal is approved.
So our council is so smart to believe that getting $18.5 million of our own money is a fair trade for a $300 million corporation that the citizens happen to own.
Alectra Inc. is virtually getting a very valuable asset for nothing. The city negotiators were even willing to give Alectra the Hydro reserve cash but they declined.
And why not? They just got the whole enchilada for Pesos on the dollar.
Can you imagine this happening in a private corporation?
Those remaining eight councillors running for re-election will have to explain why, why did they fall for this grand theft Hydro?
It’s insulting and deplorable that in the new Working Together community report addition to the city website, the claim is made that city assets have increased by $13 million and the debt has been paid down by $24.4 million.
It only goes to prove that there is a sucker born every minute. Only we are the suckers who have experienced the malfeasance of those councillors who approved this deal.
In my opinion, there is strong evidence that this is a major cover-up that has the odor of conspiracy to defraud the citizens of a valuable asset to settle the mismanagement of the previous administration.
I believe there are grounds here to have an investigation by the Ontario Attorney General to determine if there is evidence of a crime being committed.
This isn’t going away.