Waterloo North Hydro may look to merge with another utility

Waterloo North Hydro's head office is seen as the sun sets on Wednesday, July 16, 2014. (Phil Molto / CTV Kitchener)

As Ontario’s hydro utilities continue to merge their services and acquire each other, Waterloo North Hydro could be next in line for similar treatment.

Next week, councillors from Waterloo, Wellesley and Woolwich will meet to discuss the future of the utility.

Waterloo North Hydro is currently owned by a holding company, which is in turn owned by the City of Waterloo (73.2 per cent of shares), the Township of Woolwich (20.2 per cent) and the Township of Wellesley (6.6 per cent).

Councillors will be presented with four possibilities, as well as a recommendation to immediately discount one of them – that being selling Waterloo North Hydro to another electricity distributor.

The remaining options include maintaining the status quo, pursuing a merger with another local hydro company, and acquiring another utility for itself.

Many electricity distributors across the province have struggled with the same options over the past few years.

In 2012, a provincial blue-ribbon panel recommended that Ontario’s hydro companies consolidate until there were only about eight left. There were 73 electrical utilities in the province at that time, which was already significantly down from the 307 that existed in 1998.

Since then, there have been significant steps toward consolidation. Many utilities, including Woodstock Hydro, Norfolk Power Distribution and Haldimand County Hydro, were sold to Hydro One for tens of millions of dollars.

Locally, Cambridge and North Dumfries Hydro paid about $40 million to acquire Brant County Power. The combined utility is now known as Energy+.

Guelph Hydro has been grappling with similar decisions in recent months, and continues to pursue possible mergers with other utilities.

According to a report prepared for Waterloo, Woolwich and Wellesley councillors, Waterloo North Hydro regularly turns a profit and paid its municipal shareholders $5.3 million in 2016.

The report finds that while the utility would remain profitable if it stayed as it is today, a merger “presents the greatest opportunity to enhance shareholder return.” A sale is considered a less desirable option because bigger utilities typically prefer mergers, while purchasing another utility is seen as unlikely because of few to no feasible options.

Councillors from Waterloo and the two townships will debate the issue June 7 at RIM Park.