Chamber of Commerce Reaches a Conclusion
The Guelph Chamber of Commerce (representing 825 businesses in Guelph, and over 40,000 employees) has come out with their own independent analysis of the Guelph Hydro merger proposal.
The entire report can be downloaded here - Chamber of Commerce Hydro Analysis.
Excerpts from the report are reprinted below.
The Board of Guelph Hydro has been charged by the Corporation of the City of Guelph to make recommendations based upon what is best for the City. The thoroughness of the preparations and reports from the Board shows they have acted very well within their mandate and should be congratulated for a job well done. Following our own due diligence, the Guelph Chamber of Commerce supports the recommendations of the Guelph Hydro Board of Directors to merge Guelph Hydro with Horizon Utilities.
RECOMENDATIONS
1. The financial presentation shows stronger performance from Horizon than from Guelph Hydro or most other utilities. The financial arguments favour merger.
2. The merger provides opportunity for enhanced engineering support, that will benefit Guelph businesses looking for cost savings programs via conservation and new technologies.
3. The management preparation of the merged company has been from the bottom up, which reduces the problems inherent in bringing two organizations together.
4. The mass of the merged entity will position the utility for changing economic times ahead, providing better opportunity for stabilizing rates and investing in infrastructure.
NOTES
This report has been prepared following :
* Consultation by our ten person Advocacy Committee representing retail, industrial, education, legal, personnel, agri-technology, financial, and institutional sectors. Committee members consulted their peers.
* Chambers of Commerce were consulted in St Catharine’s and Hamilton regarding corporate citizenry of Horizon, service levels, and meeting forecast revenue and expense targets
* Guelph Hydro Board of Directors were met with twice for clarification of issues
* Guelph Hydro Management was consulted
* The public was polled on our website, including members and non-members
* The Guelph Chamber of Commerce held a public meeting with our members and members of Horizon and Guelph Hydro boards of directors
COMMENTS
* Service and Rates:
The Horizon cost and rate projections have met the projections presented prior to merger in other areas. Cost and rate projections should be made to Council by Horizon. Initial comparisons look favourable.
* Local Employment Impacts:
Contract talks need to focus on the support of local contractors currently doing civil and other work for Guelph Hydro, based on their local expertise and value.
* Engineering Support:
Having additional demand management team members will assist Guelph Chamber of Commerce members to take part in cost savings opportunities. Having additional engineering staff will also help our members to identify cost savings programs requiring additional application and monitoring available via the larger administrative staff at Horizon.
* Conservation and Demand Management:
Guelph becoming the environmental champion for Horizon is the result of our work on the Community Energy Plan, and will offer additional innovation possibilities for our area, as well as research possibilities to make Guelph a centre for excellence of conservation and demand management.
* Long Term Strategic Plan:
Longer term strategic positioning will give Guelph a competitive negotiation advantage when other utilities in our area look at merging with larger utilities. The additional mass of the merged entity will offer higher returns on equity and financial stability for the City of Guelph and at the same time help to stabilize our utility rates for making local businesses more competitive.
* Experience in Mergers:
Horizon has a proven track record on concluding successful mergers which should be considered as an advantage in current discussions.
* Merged Utility Structure:
Management and employee teams from both Guelph Hydro and Horizon have reviewed best practices for each utility. The merger teams have recommended the new corporate structure to management. The merged organization has been structured from the bottom up versus structure being imposed, facilitating the job of joining workforces.
* Timing of Merger:
Negotiations put Guelph two years ahead of competitive utilities that may consider future mergers. Some manufacturing is feeling pressure from the downturn in the USA economy, and the merge would provide medium and long term relief on utility costs, as well as protecting against rate fluctuations.
* Regional Advantage:
The merged utility would be an attractive option for nearby utilities, benefiting Guelph’s future negotiating position. Rather than joining other local initiatives, Guelph would be leading
* Attraction of Business:
The excellent financial performance of Horizon, combined with local engineering advantages is a drawing card for businesses looking to locate in Guelph
* Risk:
Historically the assumption is doing nothing is less risk than changing. History shows not changing and adapting provides the higher risk. Historically opposition is stacked against change, with the most vocal opinions calling for the status quo.