Merger would lead to reduced bills, Horizon argues

Several councillors reacted with trepidation at city hall Wednesday as Horizon Ultilizes made a pitch to merge with three other companies, which would remove the city's controlling interest in the energy distribution company.

Horizon President and CEO Max Cananzi told councillors that the merger would keep electricity prices low for customers, should the Hamilton and St. Catharines-based organization merge with hydro companies in Mississauga, Barrie, Markham, Vaughan and Brampton.

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Several members of council questioned those benefits, suggesting the presentation lacked objective statistics.

"I would in no way want to entertain a conversation that is as glossy as what I've received today," said Coun. Matthew Green.

If the proposal went through, Hamilton would see its current share in Horizon (78.9 per cent) drop to 18.2 per cent of the new company, eliminating the city's controlling interest.

Council was told that municipalities would still be owners of the organization, just smaller owners of a larger business.Hamilton would hold the third largest stake in the proposed new company, behind Vaughan at 20.8 per cent and Missisaugaat 31 per cent.

Here's a list of some of benefits presented by Horizon, and some retorts from members of council.

1. Customers would, on average, would have their electricity bills reduced by $40

Horizon maintained that a merger would cut cut administration costs and improve efficiency, which would in turn lower customer's bills.

But that couldn't happen for four years, Cananzi said, as rates are locked by the Ontario Energy Board until 2019. His $40 projection is based on the years 2019-2039.

Cananzi projected $355 million in operating cost savings in the first 10 years, and $51 million per year of savings in the following ten years.

Those projections were questioned by one of the merger's biggest opponents, Coun. Sam Merulla.

Merullo asked Cananzi whether those reduced rates would be guaranteed. Cananzi said he could not guarantee any savings, but said his projections were tested by third parties.

"What can you guarantee then?" Merulla asked. "I don't want [citizens] to believe that, and don't want to mislead the public."

2. Service response for customers will be exactly the same as prior to merger

Horizon also addressed the idea that service would be worse under a larger, single company.

Their presentation said service response will be the same as before the merger, with no reduction in service levels or response time.

3. Reducing four companies into one does not mean cutting three quarters of jobs

Councillors raised the issue that a merger would cause major job losses, which would lead to a reduction of service. That was also dismissed by Horizon.

Horizon anticipates that approximately 40 jobs will be lost as a result of the merger. The company believes that those reductions will be done voluntarily, as Horizon will offer voluntary severance packages to employees.

A presentation is scheduled for Oct. 30 where the city will hear from its own experts on the merger. Horizon is also supposed to present a "more balanced" presentation on the effects of the merger at that time.