Hydro utilities trying once again to pull off merger
Vaughan to join with Markham
Already partners in Richmond Hill
Toronto Star - February 20, 2004
by John Spears
After one stillborn attempt at merging in 2001, Hydro Vaughan Distribution
Inc. and Markham Hydro Distribution Inc. will try again.
If successful, officials say, they'll become the third largest local hydro
utility in the province with 190,000 customers, behind Toronto Hydro, with
671,000 customers, and Ottawa Hydro.
The plan would involve merging the local hydro operations of Vaughan and
Markham along with those Richmond Hill Hydro, which Vaughan and Markham
bought following their failed merger three years ago.
The three utilities have operated as separate units since then, each with
its own board of directors, management, operations centre and billing system.
The new proposal will meld them into a single company with one board and a
unified operating structure.
Hydro Vaughan is directly owned by the City of Vaughan, while Markham
Hydro Distribution is a unit of Markham Energy Corp., which is owned by
the Town of Markham.
Officials of the two towns say financial details and apportionment of
share ownership in the merged utility will be worked out following
valuations of the companies.
Some jobs will disappear in the merger, Markham Mayor Don Cousens said in
"Over-all, we have about 400 employees right now in the three utilities,"
he said. "That will come down by some number."
A consultant's report said annual cost savings of $6 million to $8 million
a year should be attainable in a merged operation, Cousens said, but the
estimated one-time cost of severance packages could be $10 million. "We're
not about to be stingy or stupid in how we do that."
The former Conservative government had hoped local hydro utilities would
merge into bigger, more efficient units when it set about restructuring
the electricity industry in 1998. But aside from a buying binge by
provincially owned Hydro One, which snapped up nearly 90 local utilities
mostly in rural areas, few mergers took place.
The Ontario Energy Board is kicking off a process encouraging utilities to
think about ways of becoming more efficient.
Public meetings will be held to discuss the proposed merger in both
Vaughan and Markham on March 10, said Councillor Susan Kadis, who chairs
Hydro Vaughan. If those go well, a merger agreement will be signed within
days, and the partners will then ask the energy board for approval.
Kadis and Cousens both said the two municipalities' experience as partners
in owning Richmond Hill Hydro has produced a good working relationship.
Vaughan and Markham tried to pull off a five-way merger with Richmond
Hill, Aurora and Newmarket in 2001. That fell apart when it looked as if Vaughan
would emerge as the controlling shareholder with more than 50 per cent equity.
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