After months of consultation online, by phone, and in person, Guelph Hydro is read to present whether they’re going to buy, sell, merge, or stay exactly the same. It turns out that focus is on options two and three.
The Strategies and Options Committee Phase 1 Report being brought to council by Chief Administrative Officer Derrick Thomson next Wednesday will have three recommendations. First, the report is recommending the sale of all or part of Guelph Hydro to one or more parties, or a merger of Guelph Hydro with one or more other local electricity distribution companies. In layman’s terms, the report is saying sell it, in part or on the whole, and if you can’t sell it, merge it with another hydro utility.
The second recommendation is a follow-up to the first. It will start with research to begin a search for potential partners and/or potential buyers with the assistance of an independent advisor who will compare all the options for sale and merger as they prevent themselves. At the same time, the Strategies and Options Committee will start preliminary discussions with potential partners about whether or not a sale of merger meets the criteria set up by the committee, while keeping the public and stakeholders informed of the process.
The final recommendation is that the committee will bring back a report in mid-2017.
So what’s driving this decision on the part of the committee? Basically, Guelph Hydro is too attractive not to sell or merge with another utility. “Guelph Hydro is a financially and operationally sound LDC (Local Distribution Company) with an exemplary employee community, fully capable of meeting near-term challenges in the electricity marketplace,” says the report.
The committee believes that there are two main challenges coming down the pipe for LDCs; one is the policy and industrial environment, which includes government directions like Ontario’s decision to partial privatize Hydro One, and the other is advances in technology, including renewable energy and new distribution channels. The committee wants to strike while the proverbial iron is hot, and the fact of the matter is that where once there were 307 LDCs in 1996, there are now 70, and going on on 60. LDCs are moving away from “poles and wires” but the new role of hydro distributors has still yet to be completely determined. Here’s a break down of the various considerations of the committee.
The Strategies and Options Committee is made up of Derrick Thomson, CAO, City of Guelph (Co-Chair); Pankaj Sardana, CEO, Guelph Hydro (Co-Chair); Bob Bell, Board Vice Chair, Guelph Hydro; Mark Goldberg, Entrepreneur-in-Residence, Innovation Guelph; and, Richard Puccini, Former Managing Director and Consultant, Dillon Consulting.