By Gerry Barker
Augurs 8, 2019 – Updated 8/7/19
Part Five of Seven Parts
Note to viewers: Part Six of this series is delayed pending some new information. Thanks for your support and interest. GB
Why did Guelph Hydro’s merging with Alectra Utilities Inc. with ignoring the questions raised by the public before council approved it December 13, 2017? Why did council approve spending $2.6 million to finance the campaign to merge with Alectra? Why didn’t the city inform the 55,000 power customers of the details of the merger with Alectra Utilities?
Just prior to council approving the Guelph Hydro merger with Alectra Utilities, I was lying in bed November 2, 2017, contemplating my day and trying to absorb the Trump Twitter follies and its effect on Canada.
I received a call from a councillor and we talked about the proposed Guelph Hydro merger with Alectra Utilities Inc. I was advised to send my question to a website “energizingtomorrow.ca and the questions would be answered.” I discovered that the website rationed questions and the number of characters. In my opinion, this was suppression of public information.
On that basis, I went to work and prepared some 50 questions that I felt the Hydro customers and residents, of which I was one, needed to know about this proposal and its consequences.
Here’s a snapshot of a portion of the website that was recommended:
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.
Well, city council had already signed a memorandum of agreement with Alectra Utilities; the corporation was ready to merge Guelph Hydro. The merger would give away Guelph Hydro without any immediate compensation for the $228.4 million city investment. Hydro’s customer’s investment in poles, wires, substations, equipment, technical staff and Hydro headquarters would be sucked into the Alectra network.
Because the public was not told the details of the memorandum of agreement already signed, it is safe to say there was no consideration for the following: asset valuation, goodwill, operating surpluses, investments or the wonderful culture of the organization. It was one 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.
The city puts a No Sale sign on Guelph Hydro
Let’s start from the beginning when the city council in the fall of 2017, formed the Strategic Options Committee (SOC) co-chaired by CAO Derrick Thomson and Hydro Chief Administrative Officer, Pankaj Sardana, There were four non-elected individuals named, two from Hydro and two ratepayers.
The SOC was charged with disposing of Guelph Hydro.
Why, one may ask? If it ain’t broke, why fix it?
From the start all options were on the table although the SOC meetings were held in closed-sessions with only members of council being informed of discussions and developments.
In February, the SOC reinvented its purpose. First Panaj Sardana was removed as co-chair and replaced by Jane Armstrong, chair if Guelph Hydro. Two members of the committee were replaced including Richard Puccini.
Something else occurred that month and was only reported later, the option of selling Guelph Hydro was no longer considered by the SOC, despite interest from unnamed persons to make an offer.
The source of this development was one of the SOC members who were no longer on the committee.
In my opinion, this triggered speculation that the SOC had selected Alectra Utilities to merge with Guelph Hydro. But it became increasingly clear that disposing of Guelph Hydro was an antidote to clean up the Guelph Municipal holdings Inc’s losses of $66 million.
While Mayor Cam Guthrie cheer-leaded the merger message, it turned out the city spent $2.6 million on a campaign to convince the public this was a good deal. It was an attempt to change the spots on a leopard.
Approved by council that few understood the deal
In my opinion, it was a fluffy campaign with little attendance at town hall meetings. The administration’s communications strategy using the energizetommorrow.ca website as its conduit for merger information. It included city staff time to turn out a thick report justifying the merger just a few days before the council made its decision. This report was only available online with a small number of hard copies available to key individuals.
It reminds me of the tactic: Paralysis by Analysis
It’s ironic that prior to this last minute presentation less that 12 days before this December 13 2017 council meeting to hear citizen delegates. They didn’t listen to the 22 delegates who have reasoned argument to delay approval and to review and allow more public information.
By a vote of 10 to 3, council approved the merger.
Isn’t it strange that this same council killed online voting in the 2018 civic election but used online not to reveal the details of the merger?
This was a planned expensive project that turned over our electric distribution system for 4.86 per cent of 60 percent of Alectra utilities profit. It remains an exercise in deliberately disguising or covering up the truth, and the people are the real victims.
In agreeing to this deal, the Guthrie administration was had by experts from team Alectra. Further, they indirectly denigrated Guelph Hydro as failing to respond to the rapidly changing power technology,
The accounting labyrinth created by this so-called Community Energy Innovation has done irreparable financial damage that has resulted in annual property tax increases of averaging more than 3 per cent.
Remember in the 2014 civic election campaign, mayoralty candidate Guthrie promised he would keep the property tax rate to that of the Consumer Price Index (CPI) that was 1.11 per cent in 2014.
Then, last year our Mayor undermined the Progressive Conservation Guelph Riding Association in charge of selecting a candidate. Guthrie attempted to obtain an unopposed nomination to run for the PC’s. He was maintaining, at the time, that he would be running for Mayor. Good thing he had a card in his hand.
Of the 50 questions submitted to council, none answered except the Mayor, the last three remain a mystery.
“ Why is Guelph Hydro involved in Green Energy technology when a mismanaged sustainable energy project by GMHI has cost the citizens $66 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?
Oh! There is one question I’d like the Mayor to answer: Who received the two TESLA home power storage systems that he said were installed in Guelph?
The citizens of Guelph were the big losers in this episode involving mismanagement of city business and resources.
And the winners are:
Mayor Guthrie re-elected in October 2018,
Former CAO Ann Pappert who walked away from her job May 16, 2016 receiving $263,000 for five months work,
Former CAO Derrick Thomson received a $57,000 performance bonus for his role in the Guelph Hydro/Alectra merger in 2018. He left the city in March 2019,
Former Hydro Chair, Jane Armstrong, was appointed by council to represent the city for five years on the Alectra Utilities Board of Directors. She is being paid $25,000 a year plus expenses.
Finally, Alectra Utilities who received a gift worth $228.4 million, the book value of Guelph Hydro.
Think about this. Even if Alectra pays a $1.500 annual dividend to the city it would take an estimated 153 years to even repay the $228.4 million 2016 book value of Guelph Hydro.
Was this a great deal or what?