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OPUC looks at merger

Power company signs agreement with Whitby Hydro, Veridian to look at becoming a Durham-wide hydro utility

The Oshawa Power and Utilities Corporation has announced it has signed an agreement with the Whitby Hydro Energy Corporation and Veridian Corporation to study the possibility of merging into one company.

The Oshawa Power and Utilities Corporation has announced it has signed an agreement with the Whitby Hydro Energy Corporation and Veridian Corporation to study the possibility of merging into one company.

By Joel Wittnebel/The Oshawa Express

In keeping with a trend that has been sweeping across the province for years, Oshawa’s public utility has announced it is looking to merge with a pair of other municipally-owned corporations; a move it says will both save and grow the companies while protecting them from outside pressures.

The Oshawa Power and Utilities Corporation has announced it has signed a memorandum of understanding (MOU) with the Whitby Hydro Energy Corporation and the Veridian Corporation (collectively owned by Pickering, Ajax, Clarington and Belleville). The MOU, which has yet to be made public in full, states the trio will be looking to “explore the potential benefits and feasibility of a merger,” according to a news release.

For OPUC CEO Atul Mahajan, it is a matter of remaining competitive into the future.

“That’s really the genesis, that companies across the province are listening to what regulators and what policy makers are suggesting, taking their own companies and saying, ‘how do we look at all options to ensure long-term sustainability?’” he says.

Over the last three decades, municipally-owned hydro utilities have been buying into the old adage: united we stand. In 1989, Ontario consisted of a patchwork of 317 different municipal utilities. By 2009, that number dropped to 220, and it now sits at around 70.

In recent years, provincial literature such as the 2012 Ontario Distribution Sector Panel Review and the Advisory Council on Government Assets in 2015 push the benefits of utility consolidations.

Mahajan says the MOU is also a way of taking control and preventing the utilities from being forced into making decisions, similar to what is happening in Peterborough where the city is considering a sale to Hydro One.

“We would rather take control and drive the bus. Unfortunately, in certain situations, you can get thrown under the bus,” he says.

Following the announcement, the public took to social media to question how the final decision was reached without the approval of Oshawa council. The city is the lone shareholder of the OPUC. However, Mayor John Henry says that while council does have the final say on any potential merger, they do not control the daily business of the company.

“In the day-to-day operation of the utility, council doesn’t (have say)…they have within their mandate, the ability to have a conversation, like any business,” Henry says.

The last time council met with the OPUC was in December during a closed education and training session. The details of that meeting are still confidential, but the decision to close the session is currently under investigation by the provincial ombudsman.

Henry says he was excited by the news of the merger and that a potential “Durham-wide utility” would be able to deliver “some synergies.”

Currently, the OPUC serves more than 57,000 homes, the second largest of the group behind Veridian who powers more than 119,000 customers. Whitby Hydro provides service to more approximately 41,500 homes.

Mahajan says the goal of the future exploration is to ensure the benefits are real and if a merger took place, it would take into consideration a balance between a benefit to the customer and the impact on employees.

“The business case that we have to come up with is what is the benefit to the customer when we do this? Can we make sure that we do this in a way that the employees are not impacted?” Mahajan says.

Also in question was the potential impact on the city’s dividend it receives annually from the OPUC, which currently sits at approximately $1.7 million.

“We would expect to continue to maintain the dividend we get now, that we would be able to meet the needs of growth in our community,” Henry says.

Mahajan assured that would remain the case, adding there is even the possibly of a little more money coming the city’s way.

“I would imagine the case would be made that the dividends and the value of the company would increase,” he says.

According to news reports, when neighboring York Region merged utilities in Aurora, Newmarket, Markham and Vaughn in 2009, the new company had a $72-million increase in value over the standalone corporations.

Due to the preliminary stages of the process, no details were provided on cost or timelines for the merger investigation. However, the website dedicated to providing information on the merger states, “we expect we will know if the potential consolidation makes sense before the end of this calendar year.”