Mergers could reduce cost: Horizon CEO
Local utility looking to hook up with three others
Horizon Utilities customers need not worry that a proposed merger with three other electricity providers will result in higher bills, its CAO says.
If history is a good barometer, it could actually result in lower bills, said Max Cananzi.
Horizon Holdings Inc. was created in 2005 with the merger of municipally owned Hamilton Hydro and St. Catharines Hydro. Its offshoot, Horizon Utilities, provides electricity to 240,000 customers. There is a 79%-21% ownership split between the City of Hamilton and City of St. Catharines.
“We were able to reduce total operating costs of the new company by 15%,” Cananzi said. “Those savings were converted to lower rates for customers.”
The province recently announced it is selling Hydro One Brampton for either $607 million or for a 17% ownership stake in a new merged utility. Stepping up to the plate with Horizon Utilities to look into buying and merging with Hydro One Brampton are Enersource Corp. and Power-Stream Holdings.
Should that merger take place, it would provide service to 950,000 clients in St. Catharines, Hamilton, Simcoe County, Peel Region and York Region.
Cananzi said no one share- holder in an amalgamated company would have majority ownership.
The proposed merger has come under fire from one Hamilton city councillor. Sam Merulla has served notice he will present a motion to city council there opposing the merger.
Walter Sendzik, who as mayor of St. Catharines is on the St. Catharines Hydro board of directors, said he is reserving judgment on the merger.
“I’ll reserve comment for the board meeting that will be forthcoming, and getting further information about the potential merger, which we don’t have at this point. So I’ll reserve comment,” Sendzik said.
Cananzi said it’s important for customers to realize utilities do not make money on electricity.
“(Electricity) costs are increasing, which we don’t have any control over,” he said. “We don’t produce, we don’t make any profit, we don’t alter the pricing at all. It’s a flow-through for us — we buy it wholesale and we deliver it to the homes and businesses in our communities. We’re basically just the distributors, simply the transportation mechanism to deliver that electricity to homes and businesses.
“When we talk about reducing rates … we’re really talking about that 20% to 25% we’re responsible for.”
Cananzi said the economies of scale from the proposed merger will result in lower operating costs that could be reflected on bills.
“There are some significant duplication of costs,” he said. “Not everybody needs to have a billing system. Not everybody needs to have their own accounting systems and head offices and CEOs …. If we put the customer first, there could be some significant savings.”
Cananzi said Horizon is explor- ing the business case for the merger. If officials like what they see, they will take it to Horizon Holdings Inc.’s two shareholder boards — St. Catharines Hydro and Hamilton Utilities Corp. — then present to the respective city councils.
“Then it will be up to the municipality to see whether there’s a compelling case for (the merger), and if the public interest will be served,” Cananzi said.
From there, approval will be needed from the Ontario Energy Board. If the deal goes through, Cananzi said, it would likely close on Jan. 1, 2016.