Was this appointment part of the Hydro merger?

By Gerry Barker

January 7, 2019

Opinion

Well, that’s been a weird winter so far. One day the kids are sliding down the first fairway of the Guelph Country Club and a day later there is no snow.

Even stranger is the appointment of Hydro Chair Jane Armstrong as Guelph’s representative on the Board of Directors of Alectra Utilities.

If you missed the news Guelph Hydro is now dead and no longer our property. As of the beginning of the year, Alectra Utilities took over the city’s electricity distribution system.

So, who benefits from this disposal of a $228 million successful city-owned distribution system serving some 55,000 customers?

Well we now know of one person, Jane Armstrong, a 12-year Guelph Hydro Board member and more recently the chairperson. No doubt she is a seasoned, well-qualified individual to represent our interest of things, such as electricity and who is running the system?

Patience friends, remember Rome wasn’t built in a day. Neither will this takeover of our power distribution system and delivers promised services in a day.

This appointment is shrouded in secrecy. Who made the appointment of Ms. Armstrong? Was it council in secret session? Was it the board of directors of Guelph Hydro? In the release of the news in Guelph Today, there was no mention of just how she got the job.

It’s a juicy assignment reported to have a base salary of $25,000 plus travel expenses and payment for attending the Alectra board meetings.

Oh yes, it includes a four-year engagement.

But here is what bothers me. Ms. Armstrong was the co-chair of the Strategic Options Committee, (SOC) appointed by council, to investigate the sale. Merger or partnership of Guelph Hydro with another municipally-owned power distribution system.

In February 2017, Ms. Armstrong replaced Hydro CEO Panaj Sardana as co-chair of SOC along with Chief Administrative Officer, Derrick Thomson.

A closed-session of SOC detailing with SOC’s board personnel changes, also decided to take the option of selling Guelph Hydro off the table. This set the stage for a merger.

This information made public by Richard Puccini who was a member of the SOC board until replaced.

The rest of the story is that Alectra Utilities, in partnership with the Guthrie administration, convinced10 members of council to support the Alectra merger December 13, 2017. Three councillors voted against the merger, Phil Allt, James Gordon and Bob Bell.

Getting back to the Armstrong appointment. As the co-chair of the SOC that recommended the merger with Alectra Utilities, the perception exists that she was in a conflict of interest.

It should be noted that no elected official or city staff were eligible to take the job under the terms of the merger agreement.

Was there any attempt to advertise the position? Were other persons interviewed for the position?

Although public money is not involved in this appointment, she is representing the interests of the citizens.

Now about that $18.5 million “special dividend” the city will receive, it’s a sick joke. It is a return of cash from Guelph Hydro that is the property of the citizens.

There is nothing like closing a deal by paying us with our own money.

Here’s another observation. The low turnout last October in the civic election may be traced back to not only indifference but also failures of people to understand the Merger deal.

I believe that was by design by the Guthrie administration that was determined to merge Guelph Hydro. The only issue left out was what did the city receive for eclipsing Guelph Hydro?

Only in Guelph, you say?

 

 

 

 

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Guelph Speaks takes some time off during the holidays

By Gerry Barker

December 22, 2017

In the waning days of 2017 we are all busy preparing and sharing the Christmas and New Year’s holiday season.

Guelph Speaks (GS) is no different and will take time for needed computer maintenance and reflective down time.

It has been quite a year being capped December 10 with the merger of Guelph Hydro and Alectra Utilities. We still maintain that is the greatest giveaway of our most valued public and profitable asset ever experienced in the long 200-year history of our city.

As far as GS is concerned, the New Year will bring some interesting insights and news about the council approved deal that could change this path of consolidated absurdity.

This will be our last post until Tuesday, January 2 when we prepare posts commenting on events during the final year of the council’s mandate. The GS archives contain 922 posts that are available at guelphspeaks.ca since 2011 for information, a history of municipal affairs and perhaps some entertainment.

That totals 1,475, 200 words. It is the equivalent of 20 75,000-word novels.

I am thinking of using the posts to write a book about the management of Guelph including the people responsible from 2006 to present day. The time to organize the material is daunting but not impossible. I intend to turn over my archives to the Guelph public library’s reference department as a source of a very exciting time in our city’s history.

It is a running account of lies, secrecy, cover-ups, accomplishment and the personalities involved.

The New Year will bring a change in our city council. With the merger possibly closing next fall, the impact on the citizens, we predict, will galvanize the voters to express their objection of council’s past actions.

My wife, Barbara and I wish everyone a happy holiday and a healthy and prosperous New Year.

A special thanks to all those GS viewers who follow the blog, the only one in Guelph that challenges the administration and digs under the veneer of city-managed information to reveal the truth and the facts.

As usual, the blog remains open for comment regardless of the content taking a small vacation.

We’re back on the job Tuesday, January 2, 2018.

Best to all,

Gerry and Barbara Barker

 

 

Guelph Hydro: Fifteen Claims

Introduction

Guelph Speaks brings you the second independent analysis of the alleged Guelph Hydro/Alectra merger agreement by Toronto Energy lawyer, Jay Shepherd. Mr. Shepherd’s expertise and experience presents an unbiased and revealing overview of the controversial merger between the two corporations.

On Monday, Guelph Speaks will present a timely review prior to Wednesday’s council meeting to approve or reject the merger agreement. It will be an overview of an agreement that has yet to be finalized according to Mayor Guthrie, the Chief Administrative officer, Derrick Thomson and Alectra.

Gerry Barker, December 9, 2017

Guelph Hydro: Fifteen Claims

Posted on December 9, 2017

by Jay Shepherd

Since my article on November 5^th analysing aspects of the Guelph Hydro Alectra merger, a number of readers in Guelph have asked me to look at the transaction further, particularly in light of the lengthy report tabled December 1^st to Guelph City Council.

The best way to do that is to look at the actual agreements.  That way the information is clear and precise, and is not filtered by the perspectives of those providing the information.

I asked the Mayor, the CAO, Guelph Hydro and Alectra for the agreements, but was told by Guelph Hydro CEO Pankaj Sardana (who was apparently designated to respond on everyone’s behalf) that the agreements are not final, and so cannot be shared.  I believe they have, however, been circulated to the Guelph Hydro and Alectra boards of directors, to City Council, and others, so they can’t be that confidential (40-60 people have probably seen them by now).

Further, under OEB rules they will have to be made public when OEB approval is sought, although of course by then they will be signed, and Guelph will be legally obligated to complete the deal.  Public disclosure at that point doesn’t really help anyone.

It thus appears that the primary reason to withhold public disclosure now must be so that the public doesn’t have all of the details of the transaction.

That is unfortunate, but it is what it is.  I will have to provide my commentary based on the report to City Council.

That report comes from a specific, pro-merger perspective.  For example, the Guelph Hydro lawyers providing the legal analysis are the same firm that represented Alectra in their merger application before the Ontario Energy Board.  While I’m sure they are trying to be objective (and they are a good firm that I know well), they have an obvious point of view.  No matter how well they may eliminate their bias in fact, it is pretty difficult for them to remove the perception of non-objectivity.

The commentary below takes several of the claims in the report to City Council, fifteen in all, and assesses how they match up with the facts.

I repeat my earlier comment that I do not have an opinion on this transaction.  This article is intended to provide information and analysis, but any interpretation that suggests I think the transaction is good, or not good, would be incorrect.  I strongly believe that it is the residents of Guelph whose opinion matters.  My opinion – even if I had one – does not.

Claim #1:  A merger between Guelph Hydro and Alectra is better for Guelph residents in the long term than Guelph Hydro remaining a standalone utility.

This claim is likely to be correct.

However, it is also highly problematic, because this comparison asks the wrong question.

Guelph Hydro as a standalone utility is probably not a viable long-term option.  As the electricity distribution sector expands and becomes more complex, smaller distributors will have a hard time keeping up.  Further, they will have a hard time recruiting the best people, which will put them even more behind the curve. In these respects, the discussion of “Utility 2.0” in the report and attachments is largely accurate.  We are entering a period of change.

Guelph Hydro is big enough to be a very good utility today.  As expectations on, and challenges facing, distributors increase in the next decade or so, Guelph Hydro will probably be at a disadvantage unless it increases in size through merger or acquisition.

This means that comparing any merger proposal to the standalone option starts out stacked in favour of the merger.  Size is going to matter.  Standalone is effectively a straw man.  It is not going to happen.

The fair comparison would be a merger with Alectra vs. a merger with Cambridge or Kitchener or Waterloo or Milton or Halton Hills or Oakville or Burlington, or even several of them.  The problem is that the residents of Guelph don’t know whether those possibilities were considered and, if so, what stood in the way of reaching agreement on any of those potential merger directions.

Without that information, it is impossible to know whether the Alectra merger is better than other  viable alternatives.  The public doesn’t know what other alternatives were available, and/or considered.  (It’s a secret.  Largely for legitimate reasons, but it’s still a secret.)

The only comparison given is to an option that is not viable.  Take this deal, or die.  That is not really useful.

Claim #2:  “Guelph Hydro will pay the City a special dividend of $18.5 million immediately prior to closing, without adversely affecting its regular annual dividend.”

The implication is that this is a benefit from the transaction.  It is not.

The “special dividend” has to be paid to adjust the debt equity ratio of Guelph Hydro to roughly 60/40, the standard for Ontario distributors.  Guelph Hydro is currently managed conservatively, and so is underleveraged.  It doesn’t need a merger to pay $18.5 million out to the City, thus increasing Guelph Hydro debt and decreasing equity.  It could do that today.  The effect would in all respects be exactly the same.

It is called a dividend only because that is the legal form that is used to effect the change.  It is not like a normal annual share of profits.  It is a catch up of prior year profits that have been left in the company and accumulated as equity.  It is not coming from Alectra.  It is coming from Guelph Hydro’ cash on hand, which at the end of 2016 was $22 million.

Where the analysis by the advisors says “Guelph is better off financially under a merger with Alectra  than on a standalone basis with ~$29 in additional cash through closing adjustments and dividends”, that is just bad math.  The $18.5 million dividend is not an improvement in the City’s financial position, and the $10.1 million in extra future dividends (see below) is speculative at best.

The City is not better off initially under this transaction.  That is just not correct.

Claim #3:  “Dividends are projected to exceed dividends under the “maintain full ownership” option by $10.1 million.”

It is not possible to confirm this.

Past dividends by Guelph Hydro to the City have been $3 million per year, and there is no reason to think that would end.  Based on current estimates of Alectra combined income, a 4.63% ownership by Guelph, and 60% payout, dividends look to be about $2.2 million per year to Guelph in the short run.

Without the backup calculations for the $10.1 million figure, it is not really possible to get to anything like that on the basis of public information.

Claim #4:  “GMHI will receive one permanent seat on Alectra’s board, and will have the right to appoint an independent director.”

This is correct, but it is important to understand what it means.  It is one, not two.

Guelph will appoint one member on the 13-member Alectra board.  It cannot be a councillor or the Mayor.  It must be an independent, and it is one person.

Further, it is important to note that the Alectra board doesn’t have the same close oversight of management as is currently the case with the Guelph Hydro board.  For example, Alectra is right now before the Ontario Energy Board seeking a 2018 rate increase of 1.3% to 4.2%, depending on rate class.  That request was not approved by the Alectra board.  That decision – what rates to request – has been delegated to Alectra management.

There is no information on whether the executive management team of Alectra will include anyone from Guelph.  I suspect it will not.

Claim #5:  “There are important restrictions on transferring shares, and therefore indirectly on privatization, in the USA.”

Assuming the new USA (unanimous shareholders’ agreement) is substantially the same as the existing one, this statement is correct.  Any significant minority of shareholders can block or slow down any process of privatization of Alectra.  (Some of the details of this agreement remain confidential, even today, but for good reasons.)

It is also true that some of the municipalities that own shares of Alectra are currently opposed to selling shares to the private sector.  Alectra has a small percentage of shares already held by an investment bank, for the OMERS pension plan, and some shareholders don’t want that non-municipal ownership increased.

There will, however, be strong pressure to privatize or partially privatize in order to monetize the value of the shares of Alectra.  At some point, high priced offers will be made by companies like Enbridge, and EPCOR, and others.  It is not reasonable to expect that Alectra – or any other distributor, merged or standalone – will remain municipally-controlled forever.

Claim #6:  “Rate increases are projected to be more moderate than they would be under the “maintain full ownership” scenario.”

This is probably not true.

As I have noted in my previous article, Guelph Hydro has a better record of controlling rate increases than Alectra does, and that goes back many years.

That is likely to continue into the future.  In their merger application, Alectra filed a forecast showing expected rate increases over the ten year “sitout” period of an average 1.74% per year (Exhibit JTC1.3 in that proceeding, for those keeping score).  That included a first year increase of 2.79%.

Alectra’s actual application for their first year rate increase is now in, and it is very close to that, an average of 2.84% for the three general service classes (residential, small business, and commercial/industrial).  Some of this is based on a predetermined formula which they can’t change, and the rest is extra money they have requested for additional spending they want approved. These new rates are not yet approved, but Alectra is pressing hard.

(I have excluded Horizon, because they are required to reduce their rates in 2018 due to an agreement reached with customers in 2014).

Guelph Hydro has also applied for 2018 rates, using the same formula.  Their average distribution rate increase will be 0.23%.  The reason is that, while they used the same formula as Alectra, they didn’t ask for any extra money.  Guelph Hydro has historically been able to live within its regular budget, without extras, and still make a good profit.

Alectra has made clear that they expect to seek extra money for additional spending each and every year during their ten year sitout period.  In total, they forecast that they will want approval for $500 million or so of incremental capital spending during that period, although that will change as circumstances dictate.

They don’t actually need the money, because they will have more than enough from the savings arising out of their merger.  Under the rules, though, they can keep the merger savings, and ask for extra rate increases to spend more as well.  There is no reason to think their tactics will change after bringing Guelph into the fold.

The graph at page 25 of the advisors’ report, which shows lower distribution revenue per customer under the merger scenario, appears to be based on inappropriate assumptions.  The basis of those assumptions has not been made public.  Where in that report at page 28 the advisors say Guelph customers can expect “Rate Increases Below Inflation”, that statement is inconsistent with the evidence of Alectra in their own merger application.

It is therefore more likely that rate increases will be higher under a merged utility than under a standalone utility, but it is really difficult to forecast the amounts with any level of accuracy.

Claim #7:  “A Southwest Operations Centre will be preserved at the location of Guelph Hydro’s current offices with a minimum commitment of 10 years.”

This is almost certainly true.

The standard approach to mergers in Ontario, which Alectra uses well, is to promise a strong presence in the acquired area for a period of time.  This reduces the feeling that the local community will be served by outsiders.  This approach has been central to every past merger application I’ve seen.

On the other hand, in the longer term it will not make sense to keep a major operations centre in every Alectra community.  Some will have to eventually lose their local operations for Alectra to operate efficiently.  Ask the City of Markham, one of the original merger partners that formed Powerstream, how many Alectra employees are still based there.

Claim #8:  “Guelph Hydro employs about 130 people. About 70 of those existing positions have been identified as needing to remain in Guelph. About half of the remaining positions would be offered relocation opportunities starting in 2019, with the majority of moves happening between 2020 and 2022. The other positions are expected to be addressed through attrition, voluntary retirement, or voluntary separation wherever possible.”

These ratios are consistent with Alectra’s past approach, and so are likely to be correct.

Of the current 130 employees, 70 (mostly tool in hand employees) will remain in Guelph, which minimizes travel time to job sites.  30 others will be offered jobs within Alectra, but only if they are willing to work in Hamilton or Mississauga or Vaughan.  The other 30 will be without a job.

Claim #9:  “Alectra will establish the GRE&T Centre in Guelph as a platform for supporting transformation in the electricity industry by accelerating integrated energy solutions. The GRE&T Centre will have eight to ten new full-time positions, with $5 million of capital spending in the first three to five years of the merger, and $3 million in annual operating spending within two years of the merger.”

This is true, but it may look better than it actually is.

First, it is a relatively small commitment, $3 million a year for a utility with +$600 million in annual revenue, i.e. under ½ of 1%.

Second, and perhaps more important, the former Powerstream Head Office was, in the Alectra merger, renamed the “Sustainability and Innovation Office”.  This large (92,000 square feet) office building near Highway 400 in Vaughan, which can house 270 people, will clearly be the centre for most sustainability and innovation activities.  Decision-making, of course, will be centralized in the Alectra Corporate Office in Mississauga, which is also a large (79,000 square feet) office building that can house 200 people or more.

There is little doubt that some initiatives will be carried out in Guelph, if for no other reason than Alectra promised that.  If Guelph thinks that it will be the centre of a major hub of innovation and other green activity, that may be wishful thinking.  The GRE&T Centre (“great”, get it?) has a very pretty (green) business plan, but its substance may be substantially less than the hype suggests.

Claim #10:  “Alectra will meet or exceed service standards and reliability for electricity distribution customers in Guelph Hydro’s current service territory.”

This is also true.

As noted in my previous article, both Alectra and Guelph Hydro are well run utilities.  On both reliability and customer service, Guelph has generally been better, but both are good.  For example, Guelph currently gets about 200 phone calls on the average day, and about 5 of those have to make a second or third call to get their problem resolved.  At the Alectra service levels, about 35 would have to make that second or third call.

Claim #11:  Guelph customers will share in the $32.3 million OM&A and capital savings from the merger, as well as in the $426 million in savings from the original Alectra merger. (See Att-2, page 5).

This does not appear to be true.

Under the rules of the Ontario Energy Board, all savings for the “sitout” period go only to the shareholders.  That includes the savings for the original Alectra sitout period.  None of these savings go to the customers.  There does not appear to be any basis for saying that they will, and the report is almost certainly wrong on this point.

Claim #12:  From 2026-2041, customers will receive $73.7 million in savings from the merger. (See Att-2, p. 5).

This may or may not be true.

First, it is too far in the future to project, and second, the basis of the calculation has not been made public.

In the past, the customers of the Powerstream merger partners do not appear to have benefitted from the mergers, since their average rate increases were higher than those of Guelph, which did not have any mergers.  Horizon customers, on the other hand, did apparently benefit from the merger between Hamilton and St. Catharines.

Thus, the jury is out on this one.

Claim #13:  GMHI will benefit from greater growth in the value of its investment due to the scale of Alectra and its focus leading industry change.

There is no reason to believe this is true.

It is true that, compared to standalone, growth in value is likely to be better with a merged entity.  There is no evidence to suggest that merger with Alectra, as opposed to merger with someone else, will produce better growth in value.  Generally speaking, growth in value of a wires company is driven by demographics.  Some of Alectra has reached lower rates of customer and business growth, while Guelph and other municipalities that are not part of Alectra can look forward to quite high future growth.  Which will grow more:  Hamilton and Mississauga, or Guelph and Milton?

Whether Alectra is “leading industry change” is a matter of opinion.  Alectra is certainly active in the corridors of power, and has some influence.  Many others in the Guelph-centred region are also active and influential.  It would not be fair to say Alectra is the “leader”.  It might be fairer to say they are an important player.

Claim #14:  “All customers of a consolidated utility are expected to benefit from lower distribution rates than what they would have to pay as customers of their respective utilities.”

This is probably not true.

As I demonstrated in my previous piece, at the time rates are harmonized, the Guelph small business and commercial/industrial customers are likely to experience high rate increases, since their rates are quite low right now.  Where Alectra says that it will not harmonize rates if this is the impact, that is not consistent with their past history.

Because we can’t see the agreements, we don’t know if the City of Guelph has any veto over large increases to customers in Guelph.

Claim #15:  Guelph customers will experience a lengthy list of customer service and other improvements, shown at page 29-30 of Att-2, the advisors report.

This seems to be somewhat oversold.

When you go down the list of supposed benefits from the merged utility, it would appear that virtually all of them are already in place at Guelph Hydro.  It is not clear where actual improvements are being proposed.  Are there any?

As is so often the case when companies that have a business goal are trying to get the public onside, a picture is painted that is the prettiest version of the transaction.  Claims are made, rosy forecasts are delivered as if factual, small things are treated as big, and any details that could undermine the narrative are either not made public, or glossed over.

That appears to be the case here.  This may be a good deal.  There are arguments on both sides.  However, it is important that those assessing the situation start with the actual facts, not hopes and dreams and maybes.

Or sales pitches.

• Jay Shepherd, December 9, 2017

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Why is Guelph Hydro merging with Alectra Inc. without answers before council approves it December 13?

By Gerry Barker

November 27, 2017

I was lying in bed last Friday morning contemplating my day and trying to absorb more on the Trump follies south of the border.

I received a call from a counciilor and we talked about the Guelph Hydro proposed merger with Alectra Inc. I was advised to send my question to energizingtomorrow.ca where I could get all the answers I felt were needed.

On that basis, I went to work and prepared some 50 questions that I felt the Hydro customers and residents needed to know about this proposal and its consequences.

Here’s a snapshot of a portion of the website that was recommended I use:

The committee’s (SOC) education and community engagement efforts will continue through all phases of the process.

If Council decides to pursue merger negotiations, the community will be invited to comment on any proposed merger before Council makes its final decision.

Learn more. Ask us anything.

energizingtomorrow.ca

Well, city council has already signed a memorandum of agreement with Alectra, the corporation ready to merge Guelph Hydro. The merger would give away Guelph Hydro without any immediate compensation for the $228.4 million investment. Hydro’s customer’s investment in poles, wires, substations, equipment, technical staff and Hydro headquarters would be sucked into the Alectra network.

There is no consideration for goodwill, operating surpluses, investments or the wonderful culture of the organization that is described by knowledgeable experts as well run and profitable. In fact it is one of the top performing Local Community Distribution operations in the province.

So here’s what happened when I attempted to “Ask us anything.”

After talking to the councillor, he cautioned that I should not send my questions to CAO Derrick Thomson, who is also co-chair of the SOC, but to the energizingtomorro website and all my questions would be answered.

Well it didn’t work out that way.

Before I disclose my experience with this website, let me remind the administration of its determination to invest and practise transparency and open government.

Now it’s important to remember that the former administration spent some $600,000 to a Toronto consultant to develop a system of government that reflected open access and transparency to allow public participation.

In the case of this merger it isn’t true.

When I went into the energizingtomorrow website, there were six ID boxes and a box for my question(s).

I attempted to post 12 questions and was denied. Tried again with three questions and denied again. The reason was that the message box only allowed 255 characters per question. The restriction of the number of words and spaces per question and not allowing multiple questions, makes “Ask us Anything” well, untrue. It implies access to answering all and every question but restricts it.

In polite circles that is censoring public input and participation in the process.

I sent an email to CAO Derrick Thomson and received a muddled reply from energizing tomorrow based in Guelph Hydro.

So, I engaged plan B. I’ll send my questions to the members of council who will make the final decision December 13 just 16 days from now. I’m doing this because I believe councllors should demand answers to these questions on behalf of the citizens they represent.

 

So here is the intro addressed to council and the questions:

FROM: Gerry Barker

271 Riverview Place

Guelph, ON N1E 7G9

As a resident and taxpayer, I request answers to the following questions about the proposed merger of Guelph Hydro with Alectra Inc. As members of council, you will be asked to approve or disapprove this proposal December 13.

The reason I am asking you, the decision makers, to help answer these question is because I attempted to use the energizingtomorrow.ca “Ask us Anything” website. Well, it is setup to accept only 255 characters per question including the word spaces. It just wasn’t designed to answer multiple questions. I will refrain from explaining why.

I am presenting the questions to seek answers to better understand what’s under the hood of this project. I would appreciate a response via e-mail: gerrybarker76@gmail.com at your earliest convenience.

Thanks for your input and responses. Best, Gerry Barker

 

The questions

Is Guelph Hydro wholly owned by the City of Guelph?

Why was the Strategies and Options Committee (SOC) appointed by city council and what was its mandate?

Why were no elected officials appointed to the SOC?

How much were the SOC members paid in compensation for their services?

My current hydro bill contained a leaflet that stated: “Guelph Hydro begins merger talks with Alectra.” If this is true, why has city council already signed a memorandum of agreement with Alectra that is to be approved December 13?

Are Guelph stakeholders receiving any immediate reimbursement for turning over Guelph Hydro and its assets to Alectra?

What is the historical relationship between Guelph Hydro and Guelph Municipal Holdings Inc. (GMHI)?

What is the status of GMHI and it’s finances?

Who and how many third parties expressed an interest to the SOC to buy or merge with Guelph Hydro?

Were these inquiries reviewed by the SOC?

If so, what was the outcome of these enquiries?

Why is the public not informed why Alectra was selected by the SOC?

Was there any incentive offered to members of the SOC, city council and Guelph Hydro to promote acceptance of this merger?

What are the actual benefits for Guelph that will occur by agreeing to this Alectra merger?

Why was the membership composition of the SOC changed? Why were three members on the original committee replaced?

Did city council approve these changes in open council or closed session?

Why is the City/Guelph Hydro spending $2.36 million to expedite this merger?

Did the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

What are the terms of this agreement including finances?

Does the City/Guelph Hydro agree to turnover Guelph Hydro to Alectra in return for a share of the Alectra profits?

What is that share of profits and interest in Alectra?

Are these Alectra profits guaranteed in the memorandum of agreement?

Does the city council know exactly the impact of the agreement on the citizen owners of the utility?

Why did the SOC mandate change in February 2017 to exclude the sale of Guelph Hydro from its consideration?

Is it a coincidence that the SOC dropped the option of selling Guelph Hydro just a few days following the incorporation of Alectra Inc. January 31, 2017?

Why did the SOC not reveal that decision released by a former member of the committee recently?

Did the SOC claim that the reason for the change in its original mandate was a matter of “client-solicitor privilege?”

Who was the client and who was the solicitor?

Explain why this unknown “client” was able to change the mandate of the SOC?

When does the memorandum of agreement between Guelph Hydro and Alectra signed by city council detail the financial considerations of such a merger?

Who are the members of city council who voted to sign this memorandum of agreement with Alectra and who did not?

Is this agreement binding on the stakeholders, the people of Guelph?

What is proposed to be the share of Alectra profits and Guelph’s interests?

How many respondents to the energizingtomorrow website are in favour of the merger?

How many attendees at the Town Hall meetings responded in favour and is this on the record?

Who sponsored and owns energizingtomorrow.ca website and how much did it cost?

How many respondents said they were in favour of the merger in the telephone survey contacting 500 residents?

What was the total number of calls made by the survey company?

What were the scripted questions asked in the telephone survey?

Did the City or Guelph Hydro hire a consultant to design and execute the merger proposal? If so, what did it cost in total?

Guelph Hydro has been praised on several levels that it is extremely well run with higher than average customer service including response times. It is profitable earning $7 million in 2016 after expenses. So, what’s the sudden urgency to merge it with Alectra when Guelph Hydro customers lose control?

Why are the SOC negotiations and progress information not being shared with the public stakeholders especially when there is no competitive bid?

Why is Guelph Hydro involved in Green Energy technology when a mismanaged sustainable energy project by GMHI has cost the citizens $63 million in loss of shareholder equity?

Is Alectra agreeing to take the $93 million long-term debt of Guelph hydro?

Who is representing the citizens’ interests negotiating the merger details?

We the people have the power

These questions represent an example of crowd-sourcing where the people’s collective knowledge and experience is far greater than the wishes of the powerful minority.

Now is the time to express the power of that collective and express your opposition to this proposal by informing your councillor. With only 16 days left, we still don’t know, not only the answers to these questions but the details of any agreement. One negotiated in private in which an unknown corporation that has made sketchy promises to take over our treasured Guelph Hydro with no compensation to the stakeholders.

Now is the time to act and just say no.

 

 

There are great expectations by the Mayor of giving Guelph Hydro away

By Gerry Barker

November 17, 2917

You can’t help but wonder what happened to Mayor Cam Guthire in the past three years?

His determination to trade Guelph Hydro for four to five per cent share of Alectra, a consortium of Local Community Distribution (LCD) corporation that it has been assembled. Apparently this is based on bigger is better — but for Guelph?

Is the Mayor smarter than the rest of us?

Well, lets dissect the Seven “Facts” (his words) that he is publishing online to residents. Keep in mind the city has admitted that it is spending $2.36 million to sell this merger with Alectra to citizens. Then the administration says the publicity program will be funded by the so-called Guelph Hydro dividends sent to the city annually.

What’s wrong with this picture? Guelph Hydro is a profitable, well-run utility. Its revenue is almost entirely provided by the 55,000 Hydro customers. It’s one of the illusions that the Mayor fosters in his remarks about the seven “facts” about the merger.

He claims that more than a year has been spent studying the sale or merger of Guelph Hydro. So why are the final negotiation details not being revealed until November 30? The meeting will be held 13 days before council’s final approval or not, as it may turn out.

My information is that the mayor is recruiting, aiding and abetting council’s approval by siding with the gang of seven whom, I’m told, most are in favour of the Alectra Merger which bespeaks of their understanding of the deal.

The Mayor claims “Guelph will benefit from rates that will be better than they’d be if Guelph Hydro remained on its own.” Well, that’s not true. The rule of mergers between LCD’s, freezes the power costs to consumers for ten years. In Guelph’s case it is reported the amounts to a reduction of $40 a year.

The Mayor is mixing apples and oranges here. If this merger is approved, operational

control of Guelph Hydro will be assumed by Alectra. Once that happens, Alectra controls the costs of distribution of power to its consortium. Guelph customers will have no say.

Let’s move on to examine the seven “facts” presented by the Mayor.

Fact 1 – Comparing historical rate increases does not tell the story.

GS Comment – The Mayor is right that no two electric utilities are the same for a number of reasons. But Guelph Hydro has been judged by the government as one of the best run in the province. Again, what are the specifics to accept or deny this merger? What’s in it for the citizens and customers of Guelph Hydro?

This is a decision that we are being asked to support, in a month and a half that will affect the city far into the future when those approving it on council will not be in office.

Just wondering: Why did the Strategic Options Committee (SOC) in closed session last February, remove the option of selling Guelph Hydro from it’s mandate to investigate both merger and sale of the utility? Also, were other interested parties in purchasing Guelph Hydro considered?

Fact 2 – Savings for everyone in Guelph

GS Comment – Consolidating “our business operations” Guelph and Rockwood customers will avoid an estimated 5 per cent distributuon rate increase by 2021 and another estimated five per cent increase in 2016.” The basic information supporting this claim is not revealed nor are the savings to hydro customers.

The Mayor talks about the “potential” savings to the customers but will take years to be beneficial. The day this merger is approved is the day we lose control. The dependence on the Ontario Energy Board to protect our interests and increase dividends to the city counts for nothing. The Mayor cannot assure the citizens that this merger will be beneficial.

On a personal note, we have yet to receive any information outside of the social media world, any pronted information that details what this merger means as customers of Guelph Hydro. Not in the 13 years, we’ve lived here that included the abortive attempt to sell Guelph Hydro in 2008 to Hamilton and St Catherines.

This whole exercise is aimed at the 18 to 44 demographic by sending their message on the Internet. It excludes all thos folks who do not own or use a computer but are voters and customers of Guelph Hydro.

Fact 3 – Rates for busineses in Guelph

GS Comment – Rates for commercial/industrial power users are 39 per cent lower than that of Alectra. So the Mayor states that he expects the Ontario Energy Board would permit Guelph to operate as a “separate rate zone and commercial distribution rates would continue to be lower.” That’s called betting on a long shot with the potential of coming in last..

Next week, guelphspeaks.ca will publish an open letter to the residents of Guelph that is an unbiased report concerning the pro’s and con’s, of the Guelph Hydro/Alectra proposed merger. The author is an Energy Lawyer, Jay Shepherd, who has written extensively about all aspects of Ontario’s power, supply, distribution and government policies.

Fact 4 – Customer service and response time

GS Comment – Despiter the mayor’s claim that he has heard from the community of their concern about customer service and reliability, the minute that he signs this agreement, he cannot guarantee anything. In fact, Guelph Hydro’s record in those two key areas is among the highest in the province with an above average rating in the 90 per cent range well above the provincial average.

The quality of operations and the staff perforamance reflects the evidence that Guelph Hydro is well run and profitable compared to most municipally owned power utilities. Perhaps when a more careful investigation is conducted, Guelph Hydro may be part of a like-minded grouping of LCD’s where customer interests will be considered and transparency will prevail. What’s the rush?

Fact 5 – Who owns Alectra?

GS Comment: As best that can be told there are two Alectra’s. These are Alectra Utilities and Alectra Inc. the one that was incorporated January 31, 2017.

In its press releases, Alectra does not distinguish the roles of the two corporate entities. Apparantly in publishing the “facts” about who owns Alectra, the Mayor apparently cannot figure it out either.

Alecrta Inc. states that it is a publicly-owned utility formed this year. It is like a landlord that owns Hydro One Brampton that it purchased, and the rest of the Alectra family are partners. By agreeing to merge with Alectra turning over municipal control of each member’s power operation, we lose control.

“Following a merger, Guelph would join this list of municipal shareholders. We would continue to have an important say over hydro decisions affecting our community and we will continue to receive annual dividends we can re-invest towards community initiatives,” states the Mayor without attribution.

Here are two giant stretches of the truth. How can Alectra Inc. claim the members of its LCD consortium are publicly owned when Alectra has control? If Guelph council signs this agreement, say goodbye to Guelph Hydro in return for a miniscule share of Alectra’s profits, if any.

On the increased dividends that the mayor claims as fact, what assurances will the city receive of any increased profit? We’re facing giving up our power distribution utility for what? What’s even worse the chances are we’ll never know anything about the corporation that wan’t to control our property without any recource.

There is one thing we’ve learned about Alectra. It has borrowed some $225 million from a number of power utilities in British Columbia, Alberta, Manitoba, Quebec and New Brunswick. The mayor has steadfastly said that the Alectra deal is not a sale and that the out of province investors are not shareholders but only receive interest on their investments.

Summarizing: Guelph city council is negotiating with a corporation that has not been in business in Ontario for a year; a corporation that has borrowed $225 million from outside Ontario for unknown reasons; there is no reconciliation of the share of Alectra that Guelph will receive. As Alectra grows in its consolidation spree, what effect does this have on Guelph’s proposed share?

Would you buy a used acr from these guys?

Fact 6 – Jobs

GS Comment – The Mayor says that Guelph Hydro employs 130. He then says 70 per cent of those people would be unaffected by the merger. Doing the math, 91 employees, chiefly the technical staff, will remain. That means 39 staffers could be vulnerable unless they want to commute to Mississauga.

Alectra says that it intends to set up a Green Power Trechnology Centre in Guelph that will create a number of good-paying jobs. Key word: “Intends.” Perhaps former Mayor Karen Fabridge may head it up as she has a lot of experience in Green Power.

These “Facts” presented by Mayor Guthrie, are not facts at all. Instead, the real facts are hidden from the owners of Guelph Hydro as final negotiations are conducted in closed-session. If and when the real financial and operational facts are made public, then council has a fiduciary reponsibility to oppose the merger.

Fact 7 – Have your say

GS Comment – It is strange why the city spending $2.36 million to convince citizens this is beneficial to them, their children and their children. It has been a designed program to influence the citizens into believing it’s a good deal, and it’s without public debate with the principals. Put it this way, when a developer applies to build an apartment building in Guelph, are not the citizens living nearby informed of the plans and the affect on the neighbourhood?

So why is this Alectra deal any different? The owners, the citizens, are deliberately being kept in the dark. The Mayor’s “Facts” do not meet the standard of transparency or public participation in the city’s business.

So why is he so convinced Council should approve this merger

For a kiss and a promise, we may give Guelph Hydro away to Alectra Inc.

By Gerry Barker

November 6, 2017

Editor’s note: The following is an analysis of what we don’t know about the proposal to dispose our ownership of Guelph Hydro and to receive an undisclosed percentage of Alectra’s profits. Also, we reproduce the content of the “energize tomorrow.ca” website that fails to report the financial details of this transaction but spells out the claimed benefits to the citizen of Guelph. Finally read the pertinent question the administration should clearly provide what’s in it for all citizens. There is a lot of material here but hopefully asks the questions involving a multi-million dollar disposal of our property.

*            *            *            *

What the administration won’t tell you about the Great Guelph Hydro Giveaway

You know with 13 expert communicators in city hall, why are the citizens being fed a load of promises but no proof of completion? The entire Alectra Inc. proposal is being conducted on the Internet in a website starring our Mayor Cam Guthrie.

Why hasn’t the city sent a detailed written explanation of this proposal to all 55,000 Guelph Hydro customers? There are thousands of people in the city who do not own or know how to operate a computer. Maybe that’s part of the strategy to convince people to give Guelph Hydro away, but for what and how much?

Instead, we are told to check out the “energizing tomorrow.ca” website to help us understand a distribution system valued at $228.4 million hand over to a corporation. The recipient is Alectra Inc. that has only been incorporated and applying its business for less than ten months.

Or has it?

When asked about the Guelph Hydro’s distribution system, the answer was that the citizens would no longer own it. That would be the cost of joining Alectra. Poof! Gon! Gone without any explanation about the percentage of ownership we would receive from membership in Alectra. It has yet to be agreed and approved by council although a memorandum of agreement has been reached.

This is no small transaction and it is fraught with promises, but no hard numbers, about the benefits to the Guelph Hydro customers.

Oh! There’s a lot of contrived puffery in the Alectra takeover comparison site, paid by the taxpayers of Guelph through the Strategic Options Committee (SOC). It is a question that deserves an answer. We do know that the SOC hired a consultant last year to pave the way for this tainted takeover plan. As the SOC was part of GMHI that has no money, the city has to pick up the tab. And I will bet that consultant, when his bill is presented, will be a doozy. The cost of just creating this elegant P.R. production is in the thousands of dollars.

As the old lady in the Burger King said a few years ago: “Where’s the beef?”

The beef friends lies in the numbers that are absent from this glossy website.

As a public service for those who are not computer savvy, let’s review the online comparison copy with appropriate Guelph Speaks comment.

Here’s the opening statement, assumed to have been written by the Public Relations consultant hired more than a year ago, to persuade us to go along with dumping Guelph Hydro. It can only be described as a “Galaxy far, far away.”

Why is a Guelph Hydro-Alectra merger the preferred option?

Here’s how a Guelph Hydro-Alectra partnership is expected to benefit residents and businesses in Guelph and Rockwood.

“Sell the sizzle, not the steak.” It’s the same old story, promoted for years in the advertising business:

Remember that this is the second attempt by city council, led by the Mayor in 2008, to sell Guelph Hydro. This sale material and planning is more precise than nine years ago. It remains a sell-out of our reliable, well run, progressive and profitable organization.

For five years, Guelph Hydro was abused by the former administration’s asset holding company, Guelph Municipal Holdings Inc., to advance the green power environmental movement’s attempts to stop climate change. It was a costly, mismanaged attempt and this refined version is promising pretty well the same thing. As an aside, I know that Guelph has a climate change office and Alectra promises to co-operate with it.

When you lift up the rug, you never know what’s going on under there.

How many times do the citizens have to get kicked in the shins to be forced into a Guelph Hydro takeover that the greater majority don’t need and doesn’t want? The Mayor and Alectra claim that the citizens are in favour with the public reaction they have artificially generated to push this plan to completion.

I beg to differ. Let’s see the merger financial package before committing ourselves.

Let’s review the five categories contained in the “energizing tomorrow.ca” website that compares joining Alectra or Maintaining Guelph Hydro’s status quo.

1. Rates

            Merger with Alectra

• A merger helps keeps rates lower than standing alone, with more savings expected in the years to come.
• Merging Guelph Hydro with Alectra would help keep downward pressure on rates for at least 10 years.
• After 10 years, customers would save even more when rates are aligned across Alectra’s high-density, urban, and growing customer base.
• Guelph and Rockwood customers benefit from previous merger savings and avoid typical rate increases.

            Maintain Full Ownership

• No change to expected rate increases.
• Customers would be exposed to Guelph Hydro’s typical rate increases in 2021 and 2026
• Efficiencies limited to existing operations,

GS comment – Electricity rates in Ontario are set by the provincial government agency in charge of power generation. To suggest that our power rates would be lower is not in Alectra’s control. For example, The Wynne government has introduced a 25 per cent power rate reduction for five years by 2021, according to the provincial Auditor General; the rates will climb to pay for the loss of revenue in the previous five years. How can Alectra say rates will be lower than they are now? Economy of scale is their supposition. More sizzle than substance.

2. Service and Reliability

            Merger with Alectra

• Customer service, reliability and response times would be the same or better than they are today.
• Local crews would respond to local outages and receive support from a large, highly-skilled team during severe storms or emergencies.
• Alectra’s larger scale and focus on innovation could improve local performance and responsiveness.

            Maintain Full Ownership

• Guelph Hydro would continue delivering excellent service.
• Customers in Guelph and Rockwood would continue relying on a 24/7 control room; a technical call centre and 24/7 access to customer self-service.
• The company would meet its capital investment needs for core operation and government funding for additional capital funds.

GS comment – Okay here’s a question for you. Guelph is growing and new developments are being approved and built. Now, if this sale goes through and citizens lose control of the utility, who pays for system expansion to provide power to the new developments? If, as we have been told, that the Guelph system will be turned over to Alectra, do they pay? How does this affect development growth in the city because the city must assure developers that water services and power will be provided to their site as part of the subdivision agreement. Regardless, Alectra will have to agree to the development because they are responsible to deliver those services.

3. Community Planning

            Merger with Alectra

• As the first utility in Southwestern Ontario to merge with Alectra, Guelph Hydro’s current headquarters would become a regional operations hub.
• Increased annual dividends mean the City would have more money to invest back into our community.
• A Guelph Hydro-Alectra merger would enhance Guelph’s ability to advocate for local interests among regulators, industry and other levels of government.
• Guelph would share decision-making authority with other municipal shareholders.

            Maintain Full Ownership

• Guelph-centric innovation, community planning, and economic development strategies would continue.
• Guelph Hydro could pursue partnerships and government funding for additional capital funds.

GS Comment – It appears that Alectra’s claim that Guelph would be the ‘Hub” for Alectra’s expansion into southwestern Ontario, has no direct benefit to Guelph Hydro’s 55,000 customers. Similarly, Guelph Hydro is quite capable of dealing with regulators, industry and other levels of government, just as it has for 100 years. Again there is no tangible evidence provided by Alectra of how this so-called merger will benefit Guelph Hydro’s customers. Why? To justify completing this deal Alectra is not providing the financial details about its company. The effect of expanding the Alectra controlled Network is not addressed. What is the impact on Guelph’s alleged share of Alectra profits when additional municipal distribution companies join the Alectra consortium?

4. Environment and Innovation

• Merger with Alectra

• Both Guelph Hydro and Alectra Utilities are focused on conservation, renewable energy, and environmental sustainability.
• Alectra Utilities would invest in local infrastructure and establish a Green Energy and Technology Centre (GRE&T) in Guelph; a hub for green technology development.
• Alectra would work closely with the City’s Climate Change office on local mitigation and adaptation efforts.

• Maintain Full Ownership
• Guelph Hydro would continue to focus on conservation and support for local renewable energy projects.
• Ability to invest in new technology or modern services may be limited unless City of Guelph invests further capital or allows dividends to be impacted.

GS Comment – It may come as some surprise to Alectra that the citizens of Guelph just experienced the losses caused by recent devastating miscalculation experiments in creating sustainable power by the previous administration. The zeal to try it again without any control is something you may not have noticed when carrying out the offer to merge with Guelph Hydro. The loss was in the millions and never can be recovered. In my opinion, the last thing we need right now is yet another attempt to create a connection that we don’t need. Why should we give away our distribution system to a corporation that makes similar promises to provide cheaper and better technology in electric supply and distribution?

5. Local Jobs

            Merger with Alectra

• Good paying jobs would stay in our community, and new jobs would be created as part of the Green Energy and Technology Centre.
• Alectra is a municipally-owned utility with a caring, respectful employee culture.
• No personnel decisions have been made. If necessary, there would be natural attrition and voluntary separation wherever possible.
• *            *            *            *

            Maintain Full Ownership

• All operations would remain in Guelph.
• Some job creation would be sought through Guelph-centric innovation strategy.

GS Comment – To refer to Alectra as municipally-owned is a misrepresentation of the facts. The parts of this Alectra network are formerly municipally-owned but are now controlled by the Board of Directors of Alectra Inc. It is a private corporation that artfully predicts great things for Guelph, including lower power rates and good-paying jobs. Alectra promises more money to the city from its tiny share of the Alectra corporate profits, more jobs but no assurances to maintain the highly skilled staff of Guelph Hydro. Here’s one prediction. The most vulnerable is the administrative staff of Guelph Hydro, as their jobs will gradually disappear as Alectra transfers the jobs to its Mississauga headquarters on Derry Road. In view of these claims and promises, why are we prepared to give away our hydro system and receive any financial information about the company that wants our power distribution system? Does that sound like a good deal to you?

I have been around long enough to see a snow job by Alectra to takeover Guelph Hydro without paying for the $228.4 million worth of poles, wires, substations, the utility’s posh headquarters and equipment.

In return it has been suggested that Alectra will appoint Mayor Guthrie to the Board of Directors. If so, what are the financial terms of his membership?

We are being treated like small-time pawns in Alectra Inc.’s grand corporate mission to control a huge chunk of electric power distribution in Ontario. The icing on the cake with Guelph is to promise the city will be Alectra’s hub for southwestern Ontario’s expansion and, Tah Dah! Building a green power technology centre right here in river city.

This deal promises little to benefit Guelph’s 55,000 power customers. But it has the potential to be the dumbest mistake a city can make in say, five or ten years from now?

Once council approves this deal it can never by changed. That curtain is descending.

When Alectra provides audited statements of the effect of lower rates to its 44 curent clients in Ontario, then some credibility will be injected into this proposal.

Sell or Merge Guelph Hydro, or should we walk away?

The following are important questions that need answers by the administration before approving the merger of Guelph Hydro and Alectra Inc. They are based on the secrecy and reasonable duu dilligence employed by the SOC and city council in creating this project that wille force the loss of control over our power distribution asset.

*            How deep did the Strategic Options Committee’s (SOC) due diligence go?

*            Former SOC member Richard Puccini, writing in the local weekly, claimed there should be at least two other bidders to buy Guelph Hydro. Is this true?

*            Why did the SOC’s original schedule concluding in March 2018, of investigating and negotiating potential partners, ignore its timetable as reported to council in 2016?

*            Why did the SOC take consideration of all potential sale of Guelph Hydro off the table last February?

*            Why is the City of Guelph agreeing to give Guelph Hydro’s $228.4 million installed assets to Alectra in return for what?

*            Why should citizens agree to a merger with Alectra Inc. for a promised estimated return of four to five per cent when Guelph Hydro had a net profit last year of $7 million?

*            Has the City of Guelph, through its wholly owned subsidiary, GMHI, engaged a lawyer(s) to oversee this agreement and proposal?

*            Has the City of Guelph engaged its auditor KPMG to oversee the proposal and offer its opinion as to the benefits to the citizens?

*            Is it true that to date, this merger proposal has cost the city $1.5 million?

*            Why hasn’t the SOC told citizens of the advantages of selling the utility or merging it with a network operated by Alectra Inc?

*            Did the SOC interview civic official members of the Alectra consortium to reveal their experience dealing with Alectra?

*            Did the SOC receive and review financial and operational data regarding Alectra Inc? This includes corporate structure, governance, details of senior staff including compensation, Revenues and Expenses, debt, banking sources, current share breakdown? What are the liabilities, name of corporate auditor and legal advisors, and did the SOC receive a detailed copy of the Alectra Inc. business plan?

*            Did the SOC receive a written proposal from Alectra Inc that outlined the legal and estimated merger details of the alleged agreement and the specific benefits to the City of Guelph? If so, why hasn’t the city revealed the proposal?

*            Why hasn’t the city administration revealed the memorandum of agreement apparently signed by the Mayor and Chief Administrative Officer, Derrick Thomson, as co-chair of the SOC along with Jane Armstrong, chair of Guelph Hydro?

*            What protections of the citizens of Guelph exists in the event of Alectra’s bankruptcy, unusual technical and weather related power stoppages, arbitrary changes in the agreement that are detrimental to the City of Guelph, arbitrary changes in the governance and the original business plan?

*            Has Alectra offered any compensation to members of city council, the SOC or Guelph Hydro to obtain approval of this proposal?

*            Truth to tell, the city administration will not answer many of these questions on the grounds that they allegedly expose private proprietary information of the Alectra Inc’s. corporate organization.

*            If this excuse is used, it only reinforces the generally held belief that this is not a good deal for the citizens of Guelph, owners of Guelph Hydro.

We remain convinced that there is a lack of due diligence and this proposal should be rejected and reconsidered later when Alectra is ready to supply applicable audited financial information that backs up their proposal and its promises.

 

 

 

 

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