Why I voted YES to the merger.
We were told that the changing regulatory environment was forcing the issue. “Merge now or risk being forced to do so at a later date”.
While I think that it is pretty unlikely that we will be forced against our will to merge I believe that the OEB will continue to create a regulatory environment so onerous that smaller utilities will ultimately have to choose between spiralling distribution rates and operational deficits of full ownership or to accept a “tax incentive” to partner with other LDC’s for survival.
This Machiavellian reality of the current provincial energy policy was certainly not the sole reason to consider a merger, it was however the context of the discussion.
It was estimated that the savings for Guelph citizens as a result of this partnership with Horizon Utilities would be measured in the millions of dollars. Critics were quick to point out that the impact to individual ratepayers was only 20% of 20% (the distribution portion) of their hydro bill and the cost of power will continue to rise even if the distribution rates continue to go down.
While most rate payers may be tempted to sacrifice a small financial savings on their hydro bill to maintain the perceived benefits of full ownership it is important to put the dollars into perspective.
The estimated annual savings per rate payer in Guelph was the equivalent to a 2% reduction in the municipal tax rate - the equivalent of two glass sorting machines for the recycling facility, or twice covering the extra cost of 20min bus service recen.
Perhaps two of the biggest opportunities I saw with the proposed merger were being in a position to embrace technological changes in the energy distribution industry and meet the growing social changes with regards to conservation and demand management.
Smart meters and smart grids – micro generation – increasing role for our distribution system that didn’t exist a few years ago… I may not know much about the emerging technological opportunities however I can almost guarantee one thing – it won’t be cheap!
Having rigorously reviewed the business case I was comfortable that this was a good partnership.
Why?
- Combination of urban density, growth and favourable geography
- Guelph would have become a strategic partner based upon our location and expertise – (reflected in the premium valuation of our assets)
- As a strategic partner our facilities and the jobs created by these facilities would have been insulated during subsequent mergers – in fact we had language in the legal agreements to protect our assets
Very simply – we either needed to embrace the vision of larger regional distribution or not. This time around we chose not to, however my fear is that by choosing so we run the risk of becoming an island.
Case in point; we are NOT part of discussions with our neighbours (Kitchener, Waterloo, Cambridge) to establish commuter rail in the tri-cities area even though we already own an existing and profitable railway! There may be a number of reasons why our neighbours have chosen not to include us but I wonder if it had anything to do with our reaction to amalgamation pressures a number of years back and our withdrawal from regional projects like the “technology triangle” or the regional airport?
Perhaps the greatest lesson we can all learn from this exercise can be summed up in one word – TRANSPARENCY.
From day one - I fought to have the business case for merger be made public. I consistently maintained that such an important issue mandated complete and total transparency and the participation and consultation with our community. I argued that if this is a good recommendation it will weather the intense scrutiny of public review and that if it cannot, then it is not a good recommendation.
Unfortunately the public never had the chance to debate the real issues from the business case and instead were forced to rely on summaries and speculation – a bad combination.
I can only hope that this entire process will become a stepping stone to much greater things for our community with regards to Guelph Hydro and our community energy plan.
September 30th, 2008 at 2:44 pm
Dear Madam Mayor and Counselors,
I wish to extend to you all heartfelt thanks for all of the work that you and the staff have obviously put into the decision last evening. The decision was very close so it could have gone either way. Regardless, I respect the diligent pursuit of the best decision each of you could make for this city. This kind of debate is a hallmark of democracy and you have pursued it vigourously and I am sure it was painful at times.
None of what you have said has fallen on deaf ears. I am convinced that this debate also marks the beginning of our awareness that we must be more attentive to our civic responsibilities as citizens. You are all exemplary role models and I admire this in your leadership.
September 30th, 2008 at 8:51 pm
I want to thank you for your leadership and courage and for authentically embracing the principle of collaboration.
While other members of Council found reasons to put up a wall between Council and the Board - dismissing the Board as elitist and/or creating conspiracy theories - you had the courage to sit down with them and engage in an open dialogue. That meant you had to be prepared to have your own assumptions, biases and worldview challenged. As a consequence, you caught the exciting opportunity for our community.
October 1st, 2008 at 9:00 am
Leadership on display during merger vote
Guelph Mercury Editorial
Simon says . . . Sometimes it’s tough being Simon, and by that, I mean the leader or at least a leader.
I often think some, if not most, people have a skewed perception as to what a leader is supposed to do. I think a leader’s job is to do what’s best for his or her followers, even if the followers don’t know it’s best.
Guelph’s city council has a long list of major issues for which real leadership has been required, the latest being the failed hydro merger between Guelph Hydro Inc. and Horizon Utilities Corp. out of Hamilton.
The city voted the proposal down Monday night by an 8-5 margin.
Most councillors had well-thought-out rationale for their decisions, either for or against.
However, there’s one argument that doesn’t fly with me, if it’s the only reason, and this is where I think many will disagree: Because your constituents spoke out in opposition to the deal.
I know politicians are told they must listen to their constituents. And it’s true. But what’s more important is to represent your constituents.
Often, people don’t know what they want or what’s best. That’s why leaders are chosen or elected. Leaders have to make difficult decisions, sometimes unpopular decisions.
Many councillors at Monday’s meeting said they were concerned they weren’t going to get re-elected for making the decision they made. But good for them for sticking to their guns if they thought their decision was truly best for Guelph. That’s leadership.
There were others who said the public outcry was a big reason they were making their choice. That’s not leadership, unless it’s backed up with facts and research.
The Wal-Mart case was a great example of this. For more than a decade, the city’s leaders fought hard to prevent the store from opening in Guelph because of vocal constituents.
When the store finally opened, it had a hugely successful grand opening — I’ve heard the best in Canada. Fighting it for a decade was a waste of time, money and was more a case of pandering to a few vocal opponents rather than thinking about what was best for the city’s residents.
Leadership is about making decisions.
The hydro case was filled with good and bad decisions. Not showing the public the business case, even a heavily redacted version, was a poor choice. It’s like being a major employer and saying “we laid off less than 1,000 people,” which leaves most people thinking the worst.
The public likely lashed out largely because the deal was shrouded in secrecy.
Locking the city into a two-year negotiation in which there was no way to talk to anyone else about mergers was also a bad idea. We let the other leaders manhandle us, which is too bad.
I’m hoping the hydro decision was a good one — I think it was — but only time will tell in this case.
Hopefully, this won’t be Guelph’s next blown opportunity, like becoming a 20 per cent partner in the Region of Waterloo International Airport or part of Canada’s Technology Triangle. The city pulled out of both deals, both likely bad decisions in hindsight (the airport was a bad decision at the time, too).
Perhaps Ontario’s energy providers will be gulped up by three big powerhouses — as we were led to believe by proponents of the merger — and we’ll be left as a little fish in a big pond with other, much bigger carnivorous fish.
Or maybe we’ll merge with Waterloo and we’ll enjoy life in our own mid-sized pond with other friendly fish.
In a situation like the hydro decision you should ask yourself: what would Simon do?
October 1st, 2008 at 9:53 am
I have always sat back and let you people do what you do but this was the worst thing I have seen my city councilor do! All the experts told you guys that it was the best thing to do and you vote no. What a joke, all the good in this deal and you favored the old school ways again ,the Mayor her self says yes and she has always been against this sort of stuff. She finally looks at getting bigger and it gets shot down. I’m glad that the councilor I voted for said that he would take the chance at losing his seat to better Guelph, good for you Mike cause you’re right.
October 2nd, 2008 at 10:46 am
Hello Mike,
I was glad to see that you voted in favor of the Hydro merger. It’s too bad it didn’t pass but I guess it was too forward thinking for some of the minds on the council.
Thanks,
October 2nd, 2008 at 1:47 pm
To say Monday was a disappointment is an understatement. I know the decision had less to do with scatter graphs (at least I hope it was) and more to do with an angry citizenry, but the decision still will have an immediate and negative impact on the people and businesses in Guelph. The financial cost of the due diligence is now on our shoulders. Guelph Hydro will now need to invest in personnel, which is an added cost to drive dividends down. Rate increases will follow. Conservation projects will be curtailed with lack of internal resources, and disallowed smart metering and upgrades. Beyond the obvious and many negative financial impacts, the image of our city being anti-business and anti-development will be reinforced again. The same people who were upset over the prospects of merger will now criticize the impacts caused by their negative influence.
I congratulate those councilors who put their initial biases aside to do a proper analysis and come to an unpopular conclusion, and then to stand behind what was best for the community. That is what leadership is all about. Public office is not easy, so thanks to all for your efforts.
October 5th, 2008 at 8:02 am
I am happy to hear that you stood up for what you felt was that the right choice for Guelph. I have lived in Guelph for the past 10 years and in the area my entire life. I love Guelph, it is a great place to live. My only complain is Guelph is its continued wish to be isolated from our neighbours and the world out side. The Hydro merger is just the latest example of this. If Guelph is to continue to be the great comunity in the future we must work with our nieghbours.
I understand the council voting to strike down the merger give public sentament. But I agree that the public was not well informed in this case. It is sad that fear can rule our choices rather than logic.
Thank you for your efforts. As a Ward 4 voter I intend on casting my vote for people like Mike who look past the fear and look to what is best for Guelph even if others don’t see it.