Mayor sees big dividend in Alectra merger with Guelph

Hamilton Mayor Fred Eisenberger expects Hamilton council will look favourably upon Alectra Utilities Inc. merging with Guelph Hydro.

“There are great synergies,” said Eisenberger, who along with Paul Benson represents Hamilton on the Alectra Utilities Inc. board of directors. “It would give Alectra a foothold in that market. There would be increased benefits and reduced pressure on costs.”

Alectra recently announced it will be negotiating with Guelph Hydro Electric Systems Inc. officials to merge their operations with the recently created Alectra Utilities. Guelph council is scheduled to vote on a proposed merger offer at its Dec. 13 council meeting.

Brian Bentz, president and chief executive officer of Alectra Utilities Inc., said he expects Alectra’s municipal shareholders would be “supportive of the benefits of this merger.”

Guelph Hydro has about 55,000 customers, including in nearby Rockwood, which would join Alectra’s estimated 1 million customers. Guelph would also get an operations centre and the creation of a Green Energy and Technical Centre. Guelph Hydro has about 130 employees. Alectra is the secondlargest municipally-owned utility in North America behind the Los Angeles Department of Water and Power.

“There would be additional opportunities for increased dividends,” said Eisenberger. “I think it’s a good news story.”

Bentz said if Guelph council approves the deal in December, Alectra’s shareholders — the various municipalities such as Markham, Barrie, Mississauga, St. Catharines and Hamilton — would soon follow with votes scheduled on the deal.

If all the shareholders approve the deal, then Alectra officials would seek approval from the Ontario Energy Board, which could take place sometime in mid to late 2018. Alectra officials promised Hamilton councillors in 2015 the merged company would be able to cut hydro rates by six per cent over the next 25 years, resulting in savings of about $40 for the average homeowner and increased dividends. But Alectra officials acknowledge those dividends to municipalities, including Hamilton, are potentially more than forecast. For instance, Hamilton was projected to receive about $4 million in the first year of the merger. This year city officials are budgeting for about $6 million.

“I said at the time (Horizon officials) were conservative in their projections,” says Eisenberger. “This will benefit not only Hamilton but all across the municipalities. They will provide additional dollars for what municipalities want to do.”

Hamilton is using about $3 million of its dividends this year to help pay for the mayor’s 10-year, $50 million poverty reduction plan that involves building and maintaining affordable housing.

Bentz said the higher dividends are the result of the “synergies” of merging four utilities together. He said the forecast now is for the utility company to provide larger dividends to shareholders over the next few years.

“We are working very diligently to activate those synergies to all the municipalities,” said Bentz.