Tag Archives: Alectra Utilities

Only 5 working days left to file your letter to the OEB to stop the merger between Guelph Hydro and Alectra

By Gerry Barker

April 17, 2018

Last chance to have your say opposing the merger between Guelph Hydro and Alectra. So that citizens understand the real issue here is our city council is giving away our Hydro distribution system for shares of Guelph Municipal Holdings. Those share are worthless because the money was spent by the previous administration on failed district energy systems, solar arrays on public buildings and an expensive geothermal underground water heating and cooling system that did not have a customer base to support its operations. I estimate that the GMHI share represented public funds wasted on these projects and the loss of $60 million according to the audit performed on GMHI by KPMG. That’s your money and mine. If we do not respond and request an oral hearing when the OEB schedules the event, we have no recourse. We will be bound by the OEB decision.

Other News: A tiny story in Tuesday’s Guelph Tribune reported the Guelph Hydro  merger with Alectra is before the OEB in written form. The OEB has invited public participation in deciding the fate of Guelph Hydro simply by inviting citizens to present their objections to the OEB by sending a letter to hold an oral hearing instead of the proposed written version. What’s at stake? Your interest in Guelph Hydro will be gone in about 12 months.After April 30, 2018 there is no recourse to influence the outcome.

By sending a letter of protest today, it’s an important step in letting the OEB know that this application, born and conceived in secrecy, is not in our best interests. There is tremendous Harm being done by this proposal. It’s time for us to stop it. Read details below on how to take action.  This is the ninth inning and there are two out. GB

The long journey to give away our $300 million Guelph Hydro

Since last November, guelphspeaks.ca has questioned the merger between Alectra Inc. and Guelph Hydro. The proposal by the Strategies and Options Committee (SOC) was railroaded through council despite opposition from 22 delegates to council opposed to the proposal plus 76-email protests sent to the city clerk.

None of it mattered as council approved in principle the merger agreement by a 10 to 3 vote in the early hours of the morning. That was December 13, 2017.

I have been informed that Alectra and Guelph Hydro submitted a written agreement to the Ontario Energy Board, (OEB) for final approval. A statement followed this that the details would be produced in the local Tribune twice-weekly paper. This week there was no such statement. I don’t keep Trib papers beyond that point.

Also, the public paid “City News” carried in the Tribune had zero information, not even a news story.

Do you really believe the people have Your Say in this?

After all these months the truth is out. Before going into the details, it is important to remember, this merger that was concluded in many secret, closed-session meetings that ignored the real feelings of the 55,000 Guelph Hydro customers.

Because they were never told the truth about how it would affect them.

The OEB has received a request from Guelph Hydro and Alectra Utilities to submit a written application to approve the merger.

So here’s the current situation. We have just 15 days remaining to intervene and request an oral hearing with the OEB in which citizens, registered as interveners, can state their views,

If we do not, the OEB will accept the written submission of Alectra and Guelph Hydro and make a decision between the next six and 12 months.

After April 30, if we do not intervene, as is our right, the merger will likely be approved by the OEB.

How the stench of corruption hangs heavy in the air

Let’s drill down to look at the seamy corruptive practices of the public’s business.

One of the factors was the Liberal Premier Kathleen Wynne to consolidate the small and medium sized local community owned power distribution systems with larger distribution corporations.

This opened the floodgate for large power distribution corporations to fatten their portfolios at little capital cost or debt.

By June 7, that policy may be history with a change in government.

The rush here by Alectra-Guelph Hydro is to ensure its proposal is “grandfathered” regardless of the outcome of the election.

The OEB has invited interested parties to “Have Their Say” stating that is their right. The Board has stated that there are two types of applications:

A written application has already been submitted and an oral application in which members of the public can present their objections to the application by Alectra Utilities and Guelph Hydro.

But here’s the catch: “You can become an active participant (called an intervener). Apply by April, 30, 2018 or the submitted written hearing will go ahead.”

Editor’s Note: I have posted a sample letter to intervene on guelphspeaks. ca (located at end of post). Viewers are free to use the content of this information plus their own views, to reinforce their opinions. The details of contacting the OEB are printed below. When sending your intervening letter by snail or email be sure to use the file number EB-2018–0014.  

That seems clear enough but why did it take more than a month to reveal the written merger agreement that was received by the OEB on March 7, 2018?

Why did the City Solicitor, Christopher Cooper, side-step my request in early March for a status report on the final agreement? He seems to be a decent guy entrapped in a tangled web of power politics.

So the people directly affected by this merger agreement have just 15 days to apply for an intervener status at an OEB oral hearing.

Finally, here is the evidence that our Guelph Hydro System is being given away with no cash consideration in exchange for a tiny 4.63 per cent of only 60 per cent of Alectra Utilities’ profit. This corporation is a division of Alectra Inc.

It doesn’t take rocket science to figure out that our citizen-owned power distribution system, serving 55,000 customers, worth an estimated $300 million, is being exchanged for a tiny slice of Alectra Utilities’ profits. Is this what the Wynne Liberals were counting on?

As an activist, taxpayer and communicator, I want open administration, accountability, and transparency in my city government. It was promised in 2014 but never delivered. We can charge city council for allowing this deal to reach this absolute level, the last line of defence.

Here is a capsule of the terms of the agreement as published by the OEB:

“Alectra Utilities Corporation and Guelph Hydro Electric Systems Inc. have asked the Ontario Energy Board to approve:

  • The purchase by Alectra Inc. of all the issued and outstanding shares of Guelph Hydro Electric Systems Inc., held by Guelph Municipal Holdings Inc.
  • Transfer of Guelph Hydro Electric Systems Inc.’s distribution system to Alectra Utilities Corporation • Transfer of Guelph Hydro Electric Systems Inc.’s generation licence and rate orders to Alectra Utilities Corporation
  • Amendments to Alectra Utilities Corporation’s electricity distribution licence to include Guelph Hydro Electric Systems Inc.’s service area

The applicants say that the proposed amalgamation is expected to deliver savings to the customers of both utilities and that the rates of Alectra Utilities Corporation and Guelph Hydro Electric Systems Inc. will remain separate until 2029. The applicants also say that the costs of the proposed amalgamation will not be funded by ratepayers.”

Let’s dissect the terms as acknowledged by the OEB.

Whopper #1

Comment: First, it states this is a ‘purchase’ of all the issues and outstanding shares of Guelph Hydro Electric Systems Inc., held by Guelph Municipal Holding Inc. (GMHI).

It does not reveal the truth of the value of GMHI including shares that blew through more than $60 million of shareholder funds (the people of Guelph) and its shares are essentially worthless.

So, what is Alectra paying for these worthless GMHI shares? More importantly, who winds up owning the title of the Guelph Hydro Corporation?

The $60 million shareholder equity loss is confirmed by the independent audit by KPMG in which the GMHI consolidated statement showed the shareholder equity was worthless. But GMHI did control the financially healthy Guelph Hydro Electric Systems Inc.

This take-over of Guelph Hydro made by the former GMHI board of directors chaired by the former mayor, posed a dilemma for the present mayor and council.

How to dance through the Last Tango of  merger mania

This is how the merger cover-up began. The deal was not about Guelph Hydro, it was about the city administration divesting itself of an asset to get that $60 million GMHI deficit off the city books.

That’s why in February 2017, the Strategies and Options Committee removed the option of selling Guelph Hydro. This opened the door for this terrible deal to give Guelph Hydro away for a pittance and in one stroke clean up the GMHI balance sheet for which the city was responsible.

The key word in this description of the take-over is Alectra assuming all the “issues” surrounding not only Guelph Hydro but also its “controller” GMHI.

Whopper #2

The submitted agreement states that Guelph Hydro’s distribution system is “transferred” to Alectra Utilities with no apparent serious cash consideration. Mayor Guthrie keeps saying that nothing is being given away. Well Cam, you’d better check the agreement you and Alectra have already submitted to the OEB for approval.

Nowhere in this agreement summary released by the OEB does it mention the $18.5 million special dividend that upon approval will be paid to the city. This dividend is already the property of the citizens of Guelph.

There is nothing more insulting than to be told the city is receiving the dividend that is nothing more than a subterfuge to disguise what is really happening. Our greatest asset, Guelph Hydro is being sacrificed to cover-up the mistakes of the previous administration and the current Guthrie administration

Now we know why this terrible deal, masquerading as something best for the 55,000 Guelph Hydro customers was conducted behind-closed doors to suppress public participation. The use of phony surveys, misinformation and town halls attended only by a handful of supporters to bolster the case, was spending $2.36 million to sell the proposal to the public.

Oh, the agreement states that the ratepayers will not fund the costs of the proposed amalgamation.

Was the OEB board informed before publishing this agreement summary that the citizens of Guelph have already spent $2.36 million to fund this deal?

Here is more about the agreement now registered with the OEB.

“The applicants say that the proposed amalgamation is expected to deliver savings to the customers of both utilities and that the rates of Alectra Utilities Corporation and Guelph Hydro Electric Systems Inc. will remain separate until 2029. The applicants also say that the costs of the proposed amalgamation will not be funded by ratepayers.

That’s Whopper #3

So, here’s how to intervene before the April 30 deadline

  1. Our file number for this case is EB-2018-0014. To learn more about this hearing, find instructions on how to file letters or become an intervener, or to access any document related to this case. Please select the file number EB-2018-0014 from the list on the OEB website: oeb.ca/notice. You can also phone our Consumer Relations Centre at 1-877-632-2727 with any questions. If you are ready to send a snail mail request in your intervener application, here is the address:

Ontario Energy Board                                                                                                           300 Yonge St.  27th floor
P.O. Box 2319
Toronto, ON M4P 1E4

Your application to intervener should include the following as it applies to your feelings about the merger agreement:

“In assessing the application, the OEB will apply what is called a “No Harm Test”. This means that the OEB will be considering whether customers would be harmed from the perspective of rates, reliability and quality of service in a merger. To pass the No Harm Test, evidence must be provided that rates and service levels would be equal to or better than what they would have been without a merger.”

Well, we now know that great harm has been done to the owners of the Guelph Hydro power distribution system such as losing ownership and control.

* The assets are being turned over to another operator with no encumbrances, who have made promises to provide equal or better rates and services, jobs and a green technology centre to be set up in the Guelph Hydro headquarters facility.

* We will lose 30 to 50 jobs if the agreement is approved and the green tech operation will have a staff of ten.

How can the OEB approve an agreement in which a financially sound and dividend paying corporation is being given away. It’s a win-win for Alectra Utilities because the former Guelph Hydro will still supply those dividends that Alectra will be required to pay GMHI. It’s just under another name.

In order to assist citizens wishing to intervene and hold an oral application here is a draft form to assist you to beat the April 30 deadline. Use any part of this post in your letter but your personal opinion is what really counts.

Together we can stop this and get a fair hearing.

If we don’t respond, we only have ourselves to blame. We turned over our trust to elect a council that has proven in the past three years, in the majority, to be dumb and dumber.

            Draft letter to the OEB to intervene in the merger of Guelph Hydro

Your name(s) and address

Ontario Energy Boar

300 Yonge St. 27th floor
P.O. Box 2319
Toronto, ON M4P 1E4

Re File: EB -2018—0014

April   ? 2018

To who it may concern:

I (we) reside in Guelph and am customers of Guelph Hydro.

I(we) request being accepted as an intervener and the OEB order an oral application instead of the written one that has already been received.

I(we) understand that time is of the essence but have only just received the basic terms of the agreement.

I(we) believe there is great harm being done to the 55,000 customer of Guelph Hydro. The fact that the summary agreement as received by the OEB fails to guarantee any rate protection, or creates job losses of Guelph Hydro following approval of the merger.

We believe the process leading up to the city council, which represents us, voted 10 to 3 to accept the agreement in principle despite overwhelming objections from 22 citizen delegates and a petition of 76 residents protesting the proposal.

We respectfully urge the OEB to order an oral hearing to give the stakeholder’s an opportunity for the board members to understand how our excellent Guelph Hydro that has served us so well over the years is being given away.

Perhaps, the truth of how this merger agreement was created and executed can be questioned and is not in the best interests of the owners of the utility.

Sincerely,

Your name(s)

 

Advertisements

3 Comments

Filed under Between the Lines

Mayor Guthrie will campaign for re-election on giving away our $300 million Guelph Hydro for peanuts

By Gerry Barker

March 5, 2018

Mayor Cam Guthrie has announced he is running for mayor next October. This one time, true-blue conservative, has taken a leaf out of Premier Kathleen Wynne’s power playbook and thinks he has dumped Guelph Hydro for a few pieces of eight.

More on the “peanuts” later.

The owners of Guelph Hydro, some 55,000 customers are told the brand name “Guelph Hydro” will vanish by the end of the year.

The takeover by Alectra Utilities will present the so-called merger agreement to the Ontario Energy Board for approval later this year.

But wait! The ink isn’t dry on the two documents that ten councillors approved last December 13. True to form we still don’t know the details of the completed agreements because The Guthrie administration doesn’t like to do our business in public.

The joke is on us people. That proposal to have Guelph Hydro pay a special dividend to the city of $18.5 million is public money. It’s not Cam Guthrie’s money or his partners CAO Derrick Thomson and Hydro chair Jane Armstrong. It’s our money.

The story is that the Guthrie administration offered Alectra the money but it declined. Why endanger the deal of the century with a mere sweetener of $18.5 million when you have the whole enchilada?

Why did the Strategic Options Committee remove selling Guelph Hydro six months before the Mayor gushed that a deal was made to link up with Alectra.

At Alectra’s head office, they must have broken out the Champagne the day after the ten members of city council approved the incomplete deal. Only three members of city council were brave enough to vote against the motion. Who among this group of 13 elected comuncillors, actually listened to the 22 citizens. Most of who articulated several reasons that the deal as manufactured by city staff communications General Manager, Tara Spriggs, was not in the best interests of the citizens.

Some pleaded to delay the vote so that the public who were directly affected by the decision could more carefully consider the details.

It was clear that meeting was a set-up to guarantee council would approve it despite what the people said or expressed their opinions.

It was a well-planned ram job that I charge decided the outcome before the public meeting ever began.

The strange part is that two of the naysayer councillors, James Gordon and Phil Allt, were not favourites of mine but when the chips were on the line they and Coun. Bob Bell had the guts to say no.

The corporation taking over Guelph Hydro has a track record of buying the municipally owned hydro distribution systems including the Brampton Hydro One system, Orillia, Aurora to name a few.

So, why didn’t Alectra buy Guelph Hydro?

Because they didn’t have to. We gave it to them in return for those peanuts mentioned earlier.

Alectra promised to pay a dividend representing 60 per cent of it corporate profits with Guelph receiving a 4.36 share.

Well, it is reported that the city of Hamilton, an18 per cent shareholder in Alectra, received a dividend last year of $1.5 million. Logic will tell you that Guelph’s 4.36 per cent share of Alectra won’t pay for the postage to deliver the cheque.

Yet our city council went ahead despite the dividends of some $3.5 million sent to the city by Guelph Hydro.

Mayor Guthrie worked hard to sell this deal that was essentially smoke and mirrors. Alectra has made premises including curbing power rate increases over which it has no control. It has admitted that some 30 to 50 Hydro Staff will be severed or reassigned to another city in the Alectra system. Oh, and they promise to set up a Green Power Technology unit in Guelph that would employ 10 people.

The sad and unforgiving effect of this has yet to occur as the lawyers prepare their arguments before the Ontario Energy Board to approve the deal.

This consolidation of small to medium sized municipally-owned power distribution systems is another blunder by the Wynne Government’s attempts to increase power costs at the expense of the people who pay the bills.

Experts who agree to this terrible deal that is lop-sided, inconsiderate and just plain stupid have suckered Guelph’s council.

The worst part is that in five years, the councillorts making this decision won’t be around to witness the total loss of control of our hydro distribution system and the resulting higher operational costs.

The only creative part of this deal was the way they did it and conned a compliant council to agree to it.

The 55,000 power customers deserved better but the majority of their council didn’t care.

The fallout of this decision will instill voters with determination to vote those supporting the Alectra deal out of office, if they decide to run on this issue and their misguided support.

 

2 Comments

Filed under Between the Lines

Guthrie’s running again when the ink isn’t dry on his beloved Guelph Hydro sell-out

By Gerry Barker

January 15, 2018

Three years ago my wife and I voted for Cam Guthrie. We were not alone as he trounced the mayor without breaking a sweat. He did it by promising property tax increases linked to the Consumer’s Price Index (CPI).

He was engaging and rarely spoke of his predecessor’s record and the Urbacon debacle. His handler’s presented him as a man with a mission to reform the city by creating a “Better Guelph”, what ever that meant.

So, here we are three years later and the promises made by our Mayor were rarely kept. As a matter of fact, the opposite occurred. He ran the table handling the senior staff power grabs and failures. Of the four top managers who received those huge salary increases in December 2015, only one remains. Those increases were concocted in a closed-session meeting convened by our Mayor.

There was no indication, by the administration, of what happened that December night. Four months later, it was exposed when the provincial Sunshine List published the details of the increases.

Here’s the back-story

The first senior staffer to leave, even before the December 10 secret meeting, was former CFO Al Horsman who left in August to take a new job in Sault Ste. Marie. His final pay for seven months work was an estimated $183,000, adjusted of course, for the new level of senior management increase awarded four months later.

The second manager to defect was Derrick Thomson, Deputy Chief Administrative officer, (DCAO) of Operations for some two months. He resigned shortly after receiving a 19 per cent salary increase to take a job in the Town of Caledon, where he lives.

The third departing senior staffer was the Chief Administrative Officer, (CAO) Ann Pappert, who resigned just after the Sunshine List was published March 31, 2016. She left May 26 and received her salary of $263,000 for the full year, despite only working for five months.

The fourth beneficiary of that Dec. 10 closed-session council meeting, was DCAO Mark Amorosi who left the city February 10, 2017.

Little of this information was released by the Guthrie administration. The stonewalling has reached epic proportions as the administration, to this day, has never publicly acknowledged the meeting ever happened.

It begs the question, why did these three senior staffers resign? In the case of two of them, Pappert and Thomson, who quit after receiving huge increases commencing in 2015?

In Mr. Horsman’s case, it is safe to assume he saw the writing on the wall dealing with the new city council and chose to leave, even, perhaps, not knowing about the senior staff increases that were being planned.

The shifting sands of power

Ms. Pappert’s departure left a huge gap at the top of the staff where the CAO was in charge of more than 2.100 employees.

In June 2016, the city announced that Derrick Thomson was re-hired as CAO. Talk about the Phoenix rising from the ashes! Mr. Thomson promised to reveal his salary and eventually we were informed it was $230,000 a year for three years. It turned out that he was also paid a $9,000 taxable benefit as a personal car allowance.

Mr. Thomson has overseen two city budgets, 2017 and 2018. The property taxes in those two budgets, including the special infrastructure levy, exceeds 6 per cent.

The council appointed Mr. Thomson as co-chair of the Strategies and Options Committee (SOC), charged with disposing Guelph Hydro. No elected councillor was appointed to this committee in the 18 months of its operations..

The effect of this is that the merger proposed by the SOC between Guelph Hydro and Alectra Utilities was not only conducted solely in closed-session, but the people’s representatives, city councillors, were not participants.

As a result, the ultimate checks and balances of decisions made by an outside committee were not involved during the 18-month negotiation period by the SOC.

Horse pucky is more effective than the facts

Instead, councillors were fed a line of unadulterated horse pucky from its own staff that led to a 10-3 council approval of the proposal. In my opinion, Council abandoned its responsibilities believing their own senior city  and Hydro staff and the mayor who led the cheerleading of the proposal starting October 5.

The public promised a dose of more good-paying jobs, a green power technology centre in the Guelph Hydro Headquarters. Guelph would become the hub for Alectra’s expansion plans for Southwestern Ontario expansion, and the Guelph Hydro staff would be retained with reductions coming from attrition and relocation.

This is what Mayor Guthrie was selling along with CAO Thomson and Hydro Chair Jane Armstrong.

To add insult to injury, the public was informed that council spent $2.36 million of public money on the SOC plan to dump Guelph Hydro. Then came the announcement that Guelph Hydro, following closure of the deal would send a “special dividend” of $18.5 million to the city.

Didn’t we just lose $63 million for the Green Powered GMHI experiment?

Gee! That friends, is $20.86 million of our money spent to give away our hydro distribution system worth $300 million.

Why is it so difficult to understand? Ten councillors including the mayor voted for the unfinished merger negotiations, but voted for it anyway. Why?

To this day, I challenge any member of council to explain the final two agreements, terms and conditions of the merger. Because the night they approved it, the negotiations had not been completed. Did they not know that? Or, maybe they did.

Would someone explain to me how a council can approve a merger of a $300 million publicly-owned utility serving 55,000 customers, without knowing or understanding the final terms and conditions of this proposal?

There are words that describe what has happened. I’ll leave it to your imagination.

Our only hope is that we are told, in plain language, the details of this merger when negotiations are completed and council holds another vote to approve or walk away.

If they don’t follow this necessary step then two things will happen.

Those councillors who still support the merger will have to answer for their decision next October’s civic election. That is, those who choose re-election.

The second issue is that the Ontario Energy Board must approve the merger based on the details and evidence provided, so that the majority of Guelph citizens are either in favour, or not.

It’s an old axiom, for every action there is a reaction.

It’s our property, let’s protect it

 

 

 

4 Comments

Filed under Between the Lines

Grand Theft Hydro: How ten councillors gave away your $300 million Guelph Hydro

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.

 

4 Comments

Filed under Between the Lines

Why the Guelph Hydro merger with Alectra Utilities has the stench of hypocracy

By Gerry Barker

December 8, 2017

The time line of learning the details of the merger is a recipe for denial of public participation.

Last Saturday a citizen gave me a hard copy of the final agreement terms between Guelph Hydro and Alectra. The members of council were presented with the report Thursday, November 30 in a closed-session meeting.

The only way a citizen can access this 245-page agreement statement is online at the city website Guelph.ca. Make sure you have lots of paper and ink! For the 35 per cent of citizens who don’t use a computer for many reasons, we are sorry because it’s every citizen’s right to have access to public information.

All aboard for losing Guelph Hydro

According to the agreement package, serious negotiations between Guelph Hydro and Alectra began October 5 in a closed session of council. Apprently the Strategies and Options Committee (SOC), appointed by council, recommended the merger. Also the Guelph Hydro board of directors unanimously approved the merger. The city staff has also gone on record as recommedding to council to approve the merger.

Why would they do anything else? Their boss, CAO Derrick Thomson, is the architect of this merger as co-chair of the SOC..

Mayor Guthrie held a media briefing on what a great deal this was and how the city and 55,000 customers of Guelph Hydro would benefit. The city would receive higher dividends than currently provided by Guelph Hydro and for the power users, lower rates.

There is still no proof of that happening in the general agreement document to merge and be approved by council December 13.

It took more than a year of research into either selling Guelph Hydro or merging with another locally owned distribution utility, (LCD).

To set the stage, early in the process the SOC presented council with a timetable that indicated the various steps in the process. There were four stages. The fourth, the recommendation to sell or merge Guelph Hydro, was to have been made in the spring of 2018.

That seemed logical given the task the SOC faced. It even mentioned that there would be a civic election in October 2018.

Keep in mind that the SOC’s investigation and negotitaions were all held in closed sessions. Periodically, they would prepare an interim public report to council that was benign and lacked fundamental details of the committee’s progress.

Enter the unintended consequences

But two events occurred that were baffling and unexplained.

First, the original SOC, then called the Stategic Options Committee, had a major personnel change with three of its members replaced including co-chair Pankaj Sardana, CEO of Guelph Hydro. The two “civilian” members were replaced with two new members

CAO Derrick Thomson, remained as co-chair of the SOC. Hydro Chairperson Jane Alexander was appointed co-chair. The name was changed to Strategies and Options Committee. Why? Did the new brooms want to mark its space?

This change was agreed to in closed session. It’s a sharp lesson in the strategy of the SOC to conduct business behind closed doors.

Then came the SOC’s 2017 February meeting. Mr. Thomson was reported as not there due to a scheduling conflict. The committee then formerly removed the mandate to sell Guelph Hydro and only to consider the merger option. It was done in closed session but one of the former members of the SOC, Richard Puccini, let the cat out of the bag. He also said that the utility should be sold not merged.

Keeping the Guelph Hydro employees in the fark

Considering this SOC decision, it is clear that the 130 Guelph Hydro employees had no idea of what was going to happen to their jobs. In fact, the final agreement says that 60 employees would be gone in the next three years or 46 per cent of the workforce.

The agreement states that the brand Guelph Hydro would be dropped within a year of the merger approval once the deal is finalized.

What does council, that has the power to accept or reject the Alectra merger terms, understand the value of the utility? The agreement says it’s $18.5 million and Guelph Hydro will pay the city in the form of a “special” dividend.

So, let me get this straight. The council can approve the merger and in doing so, agree that Guelph Hydro is only worth $18.5 million to the stakeholders? There are some councillors who believe that this is evidence that the merger is a great deal for the city.

So council values Guelph Hydro at $18.5 million

Well, it’s a terrible deal and a mockery of the public trust.. First, Guelph Hydro is wholly owned by the citizens of Guelph, so moving $18.5 million from one pocket to the other is is a charade designed to mollify the majority of citizens opposed to the merger.

The question that councillors should be asking is why should they agree to give away a $300 million publicly-owned Local Community Distribution system, and receive no tangible consideration for it? This system was built by thecustomers of Guelph Hydro

Why even consider this when the city staff has warned of a $450 million shortfall in infrastructure repairs, replacemeny and manatainance? Or the staff report that the 10-year capital spending budget is $420 million underfunded?

And reports are that our city councillors are ready to accept the promise of a dividend payout of 4.63 per cent of part of Alectra Inc’s net profits. Allow me to explain. The agreement states that 4.63 per cent share is based only on 60 per cent of Alectra profits.

It is reported that the City of Hamilton, an Alectras partner, in 2016, received an 18.50 per cent share of Alectra’s profits thst paid $ a dividend of $6 million.

Under the terms of the agreement, Guelph would receive one quarter (4.63 per cent) of the Hamilton Alectra dividend or $1.5 milion. Well, that happens to be the same figure as the city is receiving now from Guelph Hydro. So how does this merger increase the dividend to the city as has been promised?

Why did Alectra borrow $220 million from investors outside Ontario?

There is no mention in the agreement about the $220 million that Alectra has borrowed from investors located in five other provinces. No mention of the interest rate being paid or the duration of the individual loan agreements. The only comment came from the Mayor who stated that the lenders were not shareholders.

There are no actual figures of what the cash dividend may be. There is a promise to establish a Green Power Technoly Centre in Guelph that will employ between eight and 10 employees. That means a net loss of employees affected by the merger is 50. all from Guelph Hydro.

So when the Mayor says the merger will create good jobs, the evidence is not apparent.

Let’s talk about the fairness report prepared by accounting firm Grant Thornton LLP (GT).

This independent report contained a mountain of detail about how this deal was put together and the assets of Guelph Hydro.

Keep remembering that all these negotiations were conducted in secret for several weeks. The one interesting item was that GT referred to Guelph Municipal Holdings Inc. as “the shareholder” of Guelph Hydro. The members of the board of directors are unknown although the Mayor was last reported to be the chairperson.

It is apparent that the city is using GMHI as the shareholder to keep hands off the merger.

The administration gave citizens just 12 days to understand a 245-page ageement

In fact a citizen needs a program to figure out who is in charge of actively negotiating this deal that is complex and difficult to understand exactly what the benefit is to the citizens? We are the real owners of Guelph Hydro Electric Services Inc. the operators of Guelph Hydro?

In my opinion, this has been a carefully planned and secretive attempt to steal Guelph Hydro by Alectra. It is like picking the pennies off a dead man’s eyes.

Throughout the long process the City of Guelph has paid some $2.36 million to outside legal consultant Aird and Berlis of Toronto and accountant Grant Thornton to legitimize the deal.

Why? Because council did not want to defend this before the 2018 election. Also the evidence of the GMHI financial disaster has been established by the KPMG audit of GMHI’s consolidated balance sheet.

I challenge city council to lay the cards on the table about GMHI and tell the stakeholders what really happened. They know but don’t want us to know. So all it has cost us so far is $2.36 million to pay all the crafters of this abomination of a deal and, as an added bonus, is grabing $18.5 million of our money as a $300 million utility disappears down the road.

This was a deliberate, creative and expensive plan to stick handle around a $63 million loss of shareholder’s equity (KPMG GMHI audit) and protect their personal interests in order to get elected next year.

Using your money to buy council support

That smell you notice is the stench of hipocracy when your money is used to cover-up a huge loss of our corporation’s shareholder value.

It’s because this plan is designed to prevent the truth that was kept under wraps until 12 days before the council meeting, to finalize this debacle. It has artfully sucker punched the very people who elected them by blocking the details of the merger until that last moment.

There is more to come on how they did it.

 

Join the growing number of citizen who oppose the merger

Meanwhile, if you don’t like to be conned, send me a note including name, address and ward to gerrybarker76@gmail.com and your name, and those of friends and family, will be added to the petition protesting the merger.

 

1 Comment

Filed under Between the Lines

Rush to judgment: How the sale of Guelph Hydro leaves a trail of deception

By Gerry Barker

October 26, 2017

Citizens have just 47 days left to mobilize and protect their ownership of Guelph Hydro before council votes to accept the Strategic Options Committee’s (SOC) recommendation. A memorandum of agreement has already been signed between Mississauga-based Alectra Utilities and the City of Guelph, owners of Guelph Hydro.

That being the case, why is the SOC recommending and Chief Administrative Officer, Derrick Thomson, agreeing to hold “Town Hall” meetings to inform the public of the details of this agreement that has been crafted behind closed doors?

Well a funny thing happened on the way to cutting this deal.

Digging into the SOC’s own document presented June 2016 to council, here’s their timetable for investigating and recommending an alleged suitable partner to take over Guelph Hydro.

Here are some excerpts from that document so you can judge for yourselves whether this is a con job or just an unvarnished lie?

Here’s what the SOC told council last year

Phase 1 (Complete)

Explore options; begin community consultation, present findings and recommendations to Guelph City Council in early 2017.

Phase 2 (March to June)

Scan the industry for potential merger partners. Consider publicly owned utility companies likely to provide value to Guelph Hydro customers, the City and the community.

(June to fall) If City Council votes to explore further: Engage specific targets, develop a preliminary business case and financial analysis, outline impact on shareholder’s rate payers, discuss governance, compare to maintaining full ownership, and make recommendation to City Council.

Phase 3 (fall to winter)

If Council decides to pursue a merger: Enter into memorandum of understanding, announce the parties involved, continue community engagement, begin exclusive negotiations, conduct financial, legal, operational and regulatory due diligence, develop merger and shareholder agreements, finalize rate impact and make recommendation to City Council.

Phase 4 (late 2017 to 2018)

If City Council approves the transaction: submit a MAADs (Merger And Acquisition Document) application to the OEB (Ontario Energy Board) for approval, develop implementation plan and establish leadership and governance of the new utility. Following OEB approval the transaction would close, the parties would enter into the shareholders’ agreement, and the merger would be given full legal effect.

Recommended Next Steps

Given the potential cost of developing complete business cases with multiple parties, the SOC recommends developing preliminary business cases with the most promising candidates and making a recommendation to Council in early fall 2017. This approach is a cost effective way to provide Council with more information while being fair and respectful to potential merger partners.

The Guelph Hydro board affirmed the recommendations made at the outset of this report at its May 29, 2017 board meeting.

*         *         *         *

GS comment: This timetable has turned out to be a myth perpetrated by not only the SOC but with the support of the chair of Guelph Municipal Holdings Inc., Mayor Guthrie. You see, the SOC was not directly linked to city council but to the failed GMHI operation. Here’s why:

SOC Recommendation

  1. THAT the Strategies and Options Committee (the “SOC”) of Guelph Municipal Holdings Inc. (“GMHI”) be directed to conduct further discussions, engage in further due diligence, and prepare preliminary business cases to assess potential mergers between Guelph Hydro Electric Systems Inc. (“Guelph Hydro”) and potential merger partners.
  2. THAT the SOC continue its communications and community engagement to inform its work.
  3. THAT the SOC report back to Council in early fall 2017 with the results of further discussions and due diligence, communications and community engagement and a preliminary business case, including recommendations regarding next steps.

The plot thickens

So the SOC lied about its timetable to dispose of Guelph Hydro.

Were the 12 potential partners that had indicated interest in merging with Guelph Hydro not considered by the SOC?

Why did the SOC speed up the decision by almost six months? Was the SOC ordered to do so and if so, by whom and why?

The SOC committee originally had five members: Co-chairs CAO Thomson and GMHI CEO Pankaj Sardana, now CEO of Guelph Hydro, plus Robert Bell, a member of the Guelph Hydro Board of Directors, and two civilian members who resigned.

The SOC committee was revamped with CAO Thomson sharing the chair’s job with Guelph Hydro Chair, Jane Armstrong. Ms. Armstrong replaced Mr. Sardana and two new civilian members were appointed, one of who was a former member of the GMHI board of directors.

This shuffle came out of the blue with no explanation as to why it was necessary.

The SOC functioned chiefly behind closed doors only reporting periodically to city council that went into closed session. Despite the SOC claims of engaging members of the community, most people had no clue of what was going on in regards to their property.

It is now apparent there is determination on the part of the Mayor to complete this deal before next year’s civic election. If he truly believes that this is a good deal for Guelph, then why won’t he release full details of the memorandum of agreement between GMHI and Alectra?

That’s all predicated on his decision to run again. He has denied that he has been approached by the Progressive Conservatives to run in the next Provincial election next June.

It is odd that the link with GMHI and the SOC even exists. Perhaps city council did not want to get its hands dirty if the bad stuff hits the fan. In my opinion, after tracking the history of all this, there is an unprecedented storm of civic discontent looming.

Note: The following is an informed comment in today’s guelphspeaks. ca written by contributor Colleen spelling out some revealing details of the Alectra proposal:

“The recently merged Alectra Company is four large provincial players – Hydro One Brampton, which was purchased by Alectra, and Powerstream, Enersource and Horizon. Remember Horizon? They are the ones that the citizens of Guelph did not want to partner with in 2007-2008. Here they are again. Guelph has been guaranteed a seat on the Alectra board, which will then have 14 board members. With a 4% share in Alectra it’s a pretty small seat. Customer service will not be local. Our general service customers already pay 37% less than the provincial average so they will not see any further savings. Residential customers thinking that they will save money are misinformed. They will not see an increase on the distribution portion of their bill only for a period of time. This amounts to about 20% of the electricity portion of their bill. So, what the “nothing but good news for Guelph” that Mr. Mayor is talking about? A bigger dividend payment to the City.”

 

Perhaps the city administration should inform the public of how much this project has cost so far. There was a consultant hired to steer this to a conclusion as evidenced by the content and words of the elected officials and the SOC members who are not elected.

At this stage, the public remains in the dark and judging from the secretive way this project has been conceived and misled the public, the responsibility lies with city council that must either approve it or just say no.

It is surprising that the Mayor was responsible for initially bringing the GMHI disaster out in the open and launching an investigation. But now, he is promoting this merger of Guelph Hydro with Alectra Utilities and the details are back in the closet.

This is the same kind of handling of important public issues that were masked by his predecessor for eight years aided and abetted by senior staff almost all of who are no longer with the city.

Mr. Mayor, please level with the people

Management on the Mayor’s level is complex and required patience, understanding, being tough and fair-minded, occasionally, being ruthless. Mayor Guthrie’s weakness is trying to be all things to all people. When he was elected in 2014, I told him to serve the people not the staff and council opponents.

This is a time for redemption and courage. Let’s hope Mayor Guthrie exercises both.

A good beginning is to level with the people and explain this agreement in detail. If the Mayor believes the deal is in the best interests of the citizens, then explain why in terms they understand. I know, it is tough to explain complicated deals but it is possible and with professional help, essential.

The evidence is mounting that’s creating doubt in the people’s minds.

In my opinion, I remain concerned about the link with GMHI and the Community Energy Initiative. Also the Alectra mission statement includes green energy technology development. Alectra’s promise is not backed up with precise information and management. This city has just experienced a costly misadventure in experiments with green power self-sufficiency. The price tag is a loss of shareholder equity in GMHI of some $63 million.

This is supposed to be an amalgamation of small to medium sized municipally owned electric distribution systems. It should not include dabbling in costly green power projects. History has shown alleged cost reductions linked to green power in the name of climate change are not achieved but instead, boost costs to the consumer.

This consolidation of local power distribution systems is a part of the Liberal government’s energy plan that so far has delivered the highest cost of electric power to Ontario consumers in the country.

Ontario’s leaders tore down gas energy generating plants in Oakvile and Mississauga to save four Liberal seats in the 2010 provincial election… it worked!

Then the Liberals awarded rich wind and solar power contracts to major corporations such TransCanada Pipelines.

In their rush to achieve green power at any cost, the Liberals sold 57 per cent of Hydro One to private enterprise allegedly to balance the books in 2017. That last one is a doozy as the privatized Hydro One just spent $4 billion to buy the electric generating and distribution system serving 375,000 Seattle and area customers. Most of its generating capability is coal-fired. That’s ironic in that we banished coal usage in Ontario some time ago.

The intention of Alectra to build a Green Power Technology Centre in Guelph is something we don’t need or want. Been there, done that.

Sorry Alectra, NO SALE

1 Comment

Filed under Between the Lines