City to vote on PDI sale options Monday
The city’s electrical distribution system hasn’t yet been sold to Hydro One, but city council is expected to vote a final time Monday to consider two options for use of the expected proceeds: invest in a bank portfolio or invest in the city-owned renewable energy company.
The city is expecting to sell Peterborough Distribution Inc. (PDI) late in 2020.
While 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.
At a meeting Nov. 12, councillors gave preliminary approval to staff to further examine the two proposed options, ask the public to weigh in and then offer a final recommendation in March.
On Monday at a city council meeting, a ratification vote for this plan is on the agenda.
The deal 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.
City staff anticipates the deal will be approved soon by the Ontario Energy Board (OEB), which is the province’s electricity and natural gas regulator. The OEB is holding an oral hearing on the deal Dec. 2 to 4 in Toronto.
The previous council approved the sale in late 2016 after Hydro One said it wanted to buy PDI.
The board of the investment company that governs PDI, City of Peterborough Holdings Inc. (CoPHI) 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 to sell.
PDI is a branch of Peterborough Utilities Inc., which was founded 105 years ago.
Council’s decision to sell it wasn’t popular with the public. Many residents said at public meetings they didn’t want the city to lose control of the asset because electricity rates could increase (although the city’s consultant said rate increases won’t happen).
Meanwhile, city council has never debated what exactly to do with the proceeds of the sale.
One option is to put the $50 million to $55 million into a bank portfolio and not touch the capital — just use the interest, which the previous council expected to be $3 million annually, to pay for construction projects.
A recent city staff report suggests using any interest to finance projects that might stem from council’s recent declaration of a climate emergency.
That idea was discussed briefly at a meeting on Wednesday of the city’s new advisory board on environmental matters, made up of eight citizens with expertise in environmentalism. Committee member Dana Jordan said she liked the idea of PDI sale proceeds potentially funding projects to curb climate change, and said perhaps it should be recommended to council.
The other option is investing in CoPHI, the city-owned company that operates electricity and water distribution systems locally.
CoPHI also develops and operates renewable hydro and solar generation facilities and pays returns to the city ($5.7 million in dividends is expected to come to the city this year).