Four Ontario Electric Utilities Pursue Merger

Ontario's four largest local electricity distribution companies are working to form a large new utility

Enersource Corp., Horizon Utilities Corp., Hydro One Brampton Inc., and PowerStream Inc. have made a commitment to merge and create a new utility.

The companies said in a joint statement on April 16 that the proposed merger would allow a new, larger company "to use its collective resources to deliver a favourable impact on distribution rates, more efficient services and innovative technologies for customers."

The action follows recent recommendations made by the Advisory Council on Government Assets, the companies said

The panel of public policy experts appointed by Ontario's premier to advise the government on key assets-including Hydro One and Ontario Power Generation-said in its April 16 report that the merger could create a distribution company serving the Toronto and Hamilton Area that could compare in scale with Toronto Hydro and Hydro One Networks. That would "improve industry competition for regional consolidation by increasing the number of [local distribution companies] with the capacity to drive further consolidation and thereby act as a catalyst for further consolidation." That, in turn, would lead to "a favourable impact on rates," the report concludes.

Significantly, the panel also recommends that the province should sell, "over time," its majority interest in Hydro One. The panel noted that previous efforts of Hydro One divestiture had shown that a staged approach, rather than trying to sell too much at one time, was better.

-Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)

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