You will decide on September 29th whether to approve a proposed merger of Guelph Hydro with the much larger Horizon Utilities. The view of the Council of Canadians – Guelph Chapter is that this merger would be a mistake – one from which we could not turn back. The following are some of the reasons.
1) Loss of local control – Currently, local control of Guelph Hydro ensures ready access to key staff and a local board of directors, as well as better accountability and transparency. We might have 24.5% ownership and three out of 13 board seats right after the merger, but as Horizon continues to grow via additional mergers and acquisitions as it plans to do, Guelph’s share of the pie will get smaller and smaller.
Guelph’s position on matters important to its residents will have less and less influence.2) Economies of scale nearly attained – A group of concerned Guelph citizens has produced a study that exposes some of the bad assumptions that are part of the merger business case. Among these is that ‘bigger means better’ for Guelph customers. The study shows that Guelph Hydro is near the sweet spot in number of customers where costs are reduced through economies of scale while still permitting local control. Horizon intends to grow into that size range where, according to the study, size actually begins to increase costs. This is backed up by two independent academic studies. If we want better rates, we would be better off merging with a few smaller neighbouring utilities such as those in the Wellington County or in Waterloo Region.
3) Inheriting old infrastructure – Sources close to the industry have told us that Guelph’s infrastructure is much newer than that in Hamilton and St. Catharines. Guelph taxpayers would have to help finance upgrades to these old systems as shareholders of the merged Horizon Utilities.
And we would share in this burdensome liability for years to come.4) Privatization – The Harris government set in motion the merger of Ontario’s many local distribution companies. It would have been very difficult for large private energy companies to expand into Ontario given the plethora of small players here. However, the situation changes with a much smaller number of much larger utilities. The current Ontario government has continued this policy, making Ontario’s publicly owned utilities increasingly vulnerable to private takeovers. If we merge and Horizon grows to the point where it attracts private interest, our electrical system could end up in the hands of a multi-national corporation.
5) Lack of transparency – With important elements of the business case kept secret, the shareholders of Guelph Hydro (Guelph taxpayers) are not able to make a fully informed decision.
There may be some benefits to the proposed merger, but we believe that they are far outweighed by the risks and drawbacks. We know that you have been inundated with a mountain of detailed facts, figures and legal fine print related to the proposed merger. We hope that you will take a step back and consider some of the larger, more fundamental issues as outlined above.
Guelph Hydro is currently a well-run, locally owned utility that pays a handsome dividend to our city each year. Once our Guelph Hydro is gone, it’s gone for good. DS