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Guelph
City continues exploring possible hydro mergers



June 15, 2017

Guelph City Council voted to continue researching possible mergers between Guelph Hydro Electric Systems Inc. and other publicly-owned electricity utility companies.

"We will come back to City Council again in the fall with the results of a preliminary business case and more detailed discussions. Then, if Council decides to begin formal merger negotiations, we'll share the names of all parties involved," said Derrick Thomson, Co-chair of the Strategies and Options Committee, and Chief Administrative Officer at the City of Guelph.

In February, City Council directed the Strategies and Options Committee to explore opportunities to merge Guelph Hydro with other publicly-owned utilities and compare those opportunities to maintaining full ownership of the Guelph's electricity distribution company.

In addition to using community-supported decision-making criteria to assess potential merger partners,  the committee is considering each company's share of ownership, shareholder arrangements, governance, and core values.

"We're listening to the community and we understand there's interest in retaining local control," said Thomson. "Control could mean owning more than 50 percent of a merged company, or, in a multi-party merger, it could mean no one owns more than half of the company. In any case, a shareholder's agreement would establish the rights of each partner, and explain how decisions are made."

Now, the committee will pursue more in-depth research and analysis to learn how a potential merger could affect Guelph Hydro's operations, financial position, infrastructure, ownership structure, organizational culture, and local electricity distribution rates.

The committee's education and community engagement efforts will continue through all phases of the process.

About the process

Phase 1 (Complete)

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

Phase 2

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.

Engage specific targets, develop a preliminary business case and financial analysis, outline impact on shareholders and ratepayers, discuss governance, compare to maintaining full ownership and make a recommendation to City Council. Continue community education and engagement activities.

Phase 3 (fall to winter)

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

Phase 4 (late 2017 to 2018)

If City Council approves the transaction: submit a Mergers, Acquisitions, Amalgamations and Divestitures application to the Ontario Energy Board for approval, develop an implementation plan and establish leadership and governance of the new utility. Upon OEB approval the transaction would close and the merger would be given full legal effect.

Ontario's changing electricity landscape

Guelph Hydro is a high-performing utility company with a solid reputation. City Council appointed the Strategies and Options Committee to explore ways to ensure customers in Guelph and Rockwood continue receiving excellent electricity service and value from their local electricity distribution company.

Advances in energy technology are making it harder for small and mid-sized utilities like Guelph Hydro to offer modern, competitive electricity prices and services. As more people generate their own electricity, choose electric vehicles, and use smart-home technologies, the role of Guelph's local electricity utility must evolve. Residents and businesses in Guelph and Rockwood expect modern, competitive electricity prices and services similar to those available in other, larger cities.

Across Ontario, cities are exploring options to ensure they get the best value from their local electricity distribution companies. Since 1996, cities have been consolidating their electric utility companies to reduce duplication and manage costs.

Resources

For more information:

Organization:
City of Guelph

Address:
City Hall, 1 Carden St
Guelph, Ontario
Canada, N1H 3A1
www.guelph.ca
Tel: (519) 822-1260


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