Last night, the Ontario Energy Board (OEB) released its decision on the merger of Guelph Hydro Electric Systems Inc. with Alectra Utilities, and with the regulator’s approval, the new utility is set to become a reality with the new year.
Exactly one year to the day of the merger’s announcement, the OEB said that it sees no problem with allowing the Mergers, Acquisitions, Amalgamations and Divestitures (MAADs) application to move forward.
“The OEB concludes that the proposed amalgamation of Alectra Utilities and Guelph Hydro, including the Applicants’ ten-year deferral rate rebasing proposal, meets the no harm test. The OEB therefore approves the transaction,” the report reads.
“The OEB looks after the interests of the consumer, so it’s very critical the application passes the ‘No harm test’,” said Eric Fagen, Director, External Communications, Government and Corporate Relations for Alectra.
“These are similar processes from the OEB’s perspective,” he adds. “The application has to show that there will be no harm done to the costumer [because of the merger]. That’s the key factor, they have to see that there are benefits.”
The “No Harm Test” for the OEB includes such considerations as cost effectiveness, economic efficiency, conservation measures, and the quality of the service, all from the perspective that these actions and mandates are being done in the best interest of the utility’s customers. The OEB examines financial statements, the merger agreement and other documents to make a determination if the merger is in the best interest of the customers of both utilities.
Fagen said that the Guelph merger review went about as smoothly as Alectra’s past MAADs review in 2017. Fagen worked for PowerStream Energy services, one of the four founding utilities that officially formed Alectra last year.
Alectra’s recent founding seemed to be the one real concern in the OEB’s deliberations, at least when it came to the issue of the 10-year pause on rate changes. The OEB proposed that Alectra should take a “holistic” approach to syncing the rates of all utilities that are part of Alectra, including Guelph Hydro.
The plan right now is that the four founding Alectra partners – Enersource, Horizon, PowerStream and Brampton – will rebase their rates in 2027, and then Guelph in 2029 before an “enterprise-wide” rebasement in 2032. The OEB proposed that Alectra should just proceed with the “enterprise-wide” rebasement in either 2027 or 2029, but Alectra argued that they are within their rights to establish their own rebase schedule, and changing it now would violate agreed upon terms. The OEB agreed, although they acknowledged that the situation wasn’t “perfect.”
Long story short, it’s now full speed ahead for the merger, just don’t expect to see the effects immediately.
“There won’t be many changes to begin with except there will be a change in some of the printed materials, which are going to be co-branded,” Fagen said. “There’s also going to be some work being done on the GrEAT (Green Energy And Technology) Centre.”
Also, expect to be paying your bills to “Guelph Hydro” for the foreseeable future. Fagen said it will take time to integrate the costumer information system, AKA: the billing for all Guelph Hydro customers, and it’s a lengthier process than you might think.
“That’s hard to say when it will be done as we’re still integrating Alectra,” Fagen explained. “There’s a system you have to go through in terms of integration, so I can’t give you a timeline when it will be complete.”
In the meantime, Alectra will be looking at cost saving measures by eliminating redundant systems and processes, and that includes the process of slimming down the Guelph-based staff by 70 positions.
“We’re pleased we have completed the regulatory process, now we just have to push ahead with the merger,” Fagen added.
The merger goes into effect on January 1, 2019.
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