Council Approves Kenora Hydro Merger with Thunder Bay Hydro
Council, as sole Shareholder of Kenora Hydro, approved the merger of Kenora Hydro and Thunder Bay Hydro today at their regular meeting of Council.
In the last few years Kenora Hydro has had some significant challenges and as a result the Kenora Hydro Board conducted a review of the future of small utilities including all options for the utility looking forward. Through this process and SWOT analysis several business risks and challenges were identified and a number of corporate models were considered. The Board ultimately recommended that a merger with Thunder Bay Hydro was in the best interests of the utility, customers, and Shareholder.
In the past 15 months the Kenora Hydro Board has spent a considerable amount of time pursuing a potential merger by reviewing financial statements, completing due diligence on each other, and identifying benefits for the Shareholders and the customers. A public open house was held in November and there have been very few concerns or opposing viewpoints brought forward from our customers.
The merger will create a new electric distribution utility to serve the current customer bases and the City of Kenora will own approximately 9.1% of the shares of the new company based on the relative enterprise values and Kenora is entitled to a seat on the new Board of Directors.
A merger will position the new utility to adapt to the changing industry and new disruptive technologies such as distributed generation, electric vehicles, and micro-grids. It will increase the economies of scale which will lower costs and reduce the business risk ultimately putting downward pressure on rates. It will benefit customers by increasing the ability to implement new technology and new services such as outage mapping. Customers will continue to benefit from local hydro staff providing excellent customer service and accountability.
The required approval process through the Ontario Energy Board encompasses a principle of “no harm test” to the customer to protect the interests of customers with respect to pricing and the adequacy, reliability, and quality of electricity service. The benefits to the shareholder and customers will be with an emphasis on maintaining low rates, being responsible corporate citizens committed to the communities that the new utility serves, and providing local accountability and close ties to the municipal shareholder.
Kenora Hydro staff will transition over to the entity and, and reductions in staff, if required, will be primarily through attrition and Kenora will maintain a local operations center.