Horizon merger debate heats up

Hamilton city councillorsare in heated debate heading into Friday afternoonover whether Horizon Utilities Corporation should merge with two other companies.

The elected officials, who also serve as Hamilton Utilities Corporation shareholders, are divided on whether Horizon should merge with PowerStream Holdings Inc. and the new Enersource holding corporation.

Both sides have staked their ground. Those in favour, such as Mayor Fred Eisenberger, sayit will be mean lower electricity bills for Hamilton residents, as well as higher dividends. Those against, such as Coun. Sam Merulla of Ward 4, say Hamilton will be giving up control of its hydro operations.

Debate so far has revolved around whether presentations will be heard in open session. Most argued that as much of the proceedings should be public as possible.

"We are representing the taxpayers of this city and it's a huge issue for them," said Coun. Judi Partridge of Ward 15.

The residents of Hamilton own Horizon, Merulla said, so they should get to hear all of the information.

But some of the information will be in camera because of confidentiality agreements between Horizon and the other utilities. Other cities largelydebated the issue in camera, saidMax Cananzi, Horizon CEO.

As for the pros and cons of merging to form the new MergeCo, Eisenbergersaid hebelieves projections that say it will result in millions in savings on the back end, and ultimately mean savingson the distribution portion of Hamilton electricitybills.

And while he's not sure how Friday's vote will go, "I anticipate a positive outcome," he said. "Let's put it that way."

But Merulla saysHamilton will lose control of the utility if it decides to mergewith other municipalities around the GTA.

• City staff backs proposed Horizon Utilities merger
• Merger would lead to reduced bills, Horizon argues

Hamilton is currently an 80-per cent shareholder of Horizon, holding the lion's share of the decision-making power on a board that includes St. Catharines representatives.

With this merger, the city will only have about 18-per cent control. Mississauga, by comparison, will have about 30 per cent.

With Horizon, "if something does go awry and the chips are on the table, the majority ownership protects us from potential negative consequences," Merullatold CBC News on Thursday.

He said the projections are just that projections. "The only guarantee we have is the fact that we lose control."

Friday's shareholders meeting will likely be followed by aspecial city council meeting,when councillors will cast a final ratifying vote of their decision.Merulla will introduce amotion then to stop a merger.

The motion is for the city to "not support any merger or other dilution which would result in the City of Hamilton losing its majority ownership ofHorizonUtilities, or any other transaction which would result inHorizonUtilities being controlled by private ownership."

City staff is recommending councillors approve the merger. If it goes through, the power share will be as follows:

• Enersource Corporation (with Mississauga owning 27.9 per cent) will hold 31 per cent ownership.
• Vaughan: 20.84 per cent.
• Hamilton: 18.15.
• Markham: 15.72.
• Barrie: 9.43.
• St. Catharines: 4.85.

On a 13-person board, Hamilton would have two representatives, Mississauga three, Vaughan three, Markham two and Barrie and St. Catharines one each.

Horizon says the merger will have the following benefits:

• Right now, it says, Hamilton's dividend payment is expected to rise from $13 million to $16.8 million per year on average over the next 24 years.
• Customers will see, on average, a reduction in distribution charges on their bills of about $40 per year.
• An injection of nearly $11 million in new money rate savings and dividends into Hamilton's economy per year on average compared to not merging over the 2016-2039 forecast period.
• Job reductions will be addressed through retirements, attrition and voluntary exits.

The Hamilton Chamber of Commerce supports a merger. The Flamborough Chamber of Commerce supports it, but its support is "tepid at best." The bigger-is-cheaper argument, it says, sounds suspiciously like the old arguments in favour of the amalgamation of Hamilton.

"We can only hope that today's 'projections' do indeed become tomorrow's reality," the chamber said in a letter to council.