Peterborough Distribution sale to Hydro One approved by OEB

$105M deal to unite crews, trucks under one service centre

Hydro One’s purchase of Peterborough Distribution Inc. from the City of Peterborough for $105 million has been approved by the Ontario Energy Board.

The decision was reached after months of considering submissions from the public. The OEB is province’s electricity and natural gas regulator.

City council approved the sale more than three years ago after a contentious debate. The deal was finalized in the summer of 2018 and the application to the OEB was submitted after that.

PDI is the distribution arm of Peterborough Utilities Inc., which will continue to exist as a power generation company. The agreement to sell PDI to Hydro One includes the wires, poles and transformers of Peterborough Utilities, which delivers electricity to 37,000 customers in Peterborough, Lakefield and Norwood.

Under the deal, a new operations centre and fleet maintenance facility will be created to merge Peterborough Utilities’ facility on Ashburnham Road and the Hydro One facility on Crawford Drive.

The agreement includes a one per cent reduction in base distribution rates for PDI electricity customers plus a five-year rate freeze followed by increases aligned with inflation for years six to 10, subject to OEB approval of rates.

Under the deal, PDI workers will receive offers for employment with Hydro One with a 12-month service and location guarantee, according to a city news release, and recognition of past service for seniority purposes.

Although the sale price for PDI is $105 million, the city can expect to net somewhere between $50 million and $55 million after fees and debts are paid.

The previous city council approved the deal late in 2016, but it took until August 2018 for the city to negotiate the details of the deal with Hydro One.

“The city looks forward to working with Hydro One on its planned construction of a new regional operations centre and fleet maintenance facility in Peterborough, once the deal has closed,” Mayor Diane Therrien stated in the press release. Hydro One president and CEO Mark Poweska says in the release that the sale “will energize life in the city of Peterborough for years to come” as Hydro One plans “continued investment in exceptional customer service.”

The previous council’s decision to sell wasn’t popular with some residents who said at public meetings they didn’t want the city to lose control of the asset because electricity rates could increase over time (although the city’s consultants disagreed).

City of Peterborough Holdings Inc. (CoPHI), which governs PDI, had advised council at the time that replacement of PDI’s aging infrastructure would cost so much it would soon threaten the distribution system’s viability — and so the city was better off to sell.

Meanwhile, city council has not yet debated what exactly to do with the proceeds of the sale. Two options were examined by councillors at a committee meeting in February.

One option is to put the funds in an investment portfolio with the non-profit Toronto firm ONE Investment. Banker Keith Taylor of ONE told councillors in February that a portfolio investment would provide a nest egg for the city forever.

The other option is to invest in CoPHI’s renewable energy company, which the president and CEO John Stephenson said backs up council’s climate change emergency declaration while providing strong dividends.

Councillors didn’t make any decisions in February; they wanted to carry out public consultation first and then debate it as part of the 2021 city budget process in January.

They’ve also yet to decide whether to split up the money and invest it in different places or invest it fully into one area.