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.
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.
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
- 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.