Markham

Markham City Council Approves PowerStream Merger

Friday, November 20, 2015

News Page

Markham, ON - Friday, November 20, 2015 - At a Special Markham Council meeting last night the City of Markham approved a transaction that will see PowerStream merge with Enersource and Horizon Utilities and purchase of Hydro One Brampton.

The proposed company will provide service to over 900,000 customers in the Greater Golden Horseshoe Area including York Region, Simcoe County, Peel Region, Hamilton and St. Catharines. Based on the number of customers served, the merged entity will be the second largest municipally-owned electric utility in Ontario and fifth largest in Canada.

“The new local distribution company will provide greater efficiencies that will benefit both the residential and business customers”, said Markham Mayor Frank Scarpitti. “The synergies will ultimately achieve a reduction in future distribution charges on the electricity bill.”

Although Markham Council and the other municipal shareholders have approved the merger, the proposed merger still requires regulatory approval by the Ontario Energy Board.

Council supported the proposal recognizing the benefits for the City of Markham, residents and business interests including:

  • Reduced Upward Pressure on Customer Distribution Rates
    The merger is expected to reduce the upward pressure on distribution rates through reduced costs, which is projected to save the average Markham household $24 to $30 annually.
  • Financial Value to Markham
    Incremental return on investment of more than 5 per cent.
  • Stronger Platform for Growth in the Future
    A larger utility resulting in greater efficiencies, more diversification, and greater capital resources and opportunities to finance expansion.
  • Better Position to Provide Input on Government Policy
    The merged utility will be in a key position of leadership and will be better able to provide input on government and regulatory energy policy for the benefit of customers and shareholders.

All presentations and reports and additional background can be found in the Major City Projects section of Markham's website.

Markham Mayor Frank Scarpitti: fscarpitti@markham.ca or 905-475-4872

About Markham
Markham, a municipality with more than 345,000 residents centrally located in the Greater Toronto area, is home to over 400 corporate head offices and more than 1,100 high tech and life science companies. Founded in the 1790s, today Markham is Canada’s most diverse community, enjoys a rich heritage, outstanding community planning and services, and a vibrant local economy. Markham has received the Excellence Canada Gold Award for Organizational Quality & Healthy Workplace, and multiple heritage and environmental awards.

About PowerStream
PowerStream is a product of several mergers and acquisitions that have seen the utility achieve synergies, which have enabled the company to provide its customers with distribution rates that are among the lowest in Ontario and earn greater dividends for its municipal shareholders. PowerStream was created in 2004 as a result of the merger of Hydro Vaughan, Markham Hydro and Richmond Hill Hydro. In 2005, the utility purchased the assets of Aurora Hydro Connections from the Town of Aurora and then merged in 2009 with Barrie Hydro. In 2012, PowerStream formed a strategic partnership with the Town of Collingwood in the ownership and operation of Collus PowerStream.

Backgrounder

On April 16, 2015, four of Ontario’s largest electricity distribution companies (LDCs) announced they would work together to form a new utility company that would serve almost one million customers in York Region, Simcoe County, Peel Region, Hamilton and St. Catharines.

The transaction involves a merger of PowerStream, Enersource, and Horizon utilities, and an acquisition of the regulated electricity distribution business of Hydro One Brampton Networks Inc.

If the transaction receives regulatory approval, the new company, with close to one million customers and $2.7 billion in assets, will be the fifth largest LDC in Canada and the second largest municipally-owned LDC in Ontario based on customers served.

The City of Markham currently owns 34.2% of PowerStream through its holding company, Markham Enterprises Corporation (MEC). The City of Vaughan owns 45.3% and the City of Barrie owns the remaining 20.5% of PowerStream.

Under the new company, referred to for now as “MergeCo”, the former PowerStream shareholders will own approximately 46%, Enersource (City of Mississauga and BPC Energy Corp.) will own 31% and Horizon (Cities of St. Catharines and Hamilton) 23%.

Of the 46% of ownership held by the former PowerStream shareholders, Markham would own 15.7% of MergeCo with an equity investment of between $43M and $47.3M.

The three PowerStream shareholders retained independent consultants Navigant Consulting Ltd., BDR North America Inc. and Gowlings LLP to provide strategic financial and legal advice.

Markham, ON - Friday, November 20, 2015 - At a Special Markham Council meeting last night the City of Markham approved a transaction that will see PowerStream merge with Enersource and Horizon Utilities and purchase of Hydro One Brampton.

The proposed company will provide service to over 900,000 customers in the Greater Golden Horseshoe Area including York Region, Simcoe County, Peel Region, Hamilton and St. Catharines. Based on the number of customers served, the merged entity will be the second largest municipally-owned electric utility in Ontario and fifth largest in Canada.

“The new local distribution company will provide greater efficiencies that will benefit both the residential and business customers”, said Markham Mayor Frank Scarpitti. “The synergies will ultimately achieve a reduction in future distribution charges on the electricity bill.”

Although Markham Council and the other municipal shareholders have approved the merger, the proposed merger still requires regulatory approval by the Ontario Energy Board.

Council supported the proposal recognizing the benefits for the City of Markham, residents and business interests including:

  • Reduced Upward Pressure on Customer Distribution Rates
    The merger is expected to reduce the upward pressure on distribution rates through reduced costs, which is projected to save the average Markham household $24 to $30 annually.
  • Financial Value to Markham
    Incremental return on investment of more than 5 per cent.
  • Stronger Platform for Growth in the Future
    A larger utility resulting in greater efficiencies, more diversification, and greater capital resources and opportunities to finance expansion.
  • Better Position to Provide Input on Government Policy
    The merged utility will be in a key position of leadership and will be better able to provide input on government and regulatory energy policy for the benefit of customers and shareholders.

All presentations and reports and additional background can be found in the Major City Projects section of Markham's website.

Markham Mayor Frank Scarpitti: fscarpitti@markham.ca or 905-475-4872

About Markham
Markham, a municipality with more than 345,000 residents centrally located in the Greater Toronto area, is home to over 400 corporate head offices and more than 1,100 high tech and life science companies. Founded in the 1790s, today Markham is Canada’s most diverse community, enjoys a rich heritage, outstanding community planning and services, and a vibrant local economy. Markham has received the Excellence Canada Gold Award for Organizational Quality & Healthy Workplace, and multiple heritage and environmental awards.

About PowerStream
PowerStream is a product of several mergers and acquisitions that have seen the utility achieve synergies, which have enabled the company to provide its customers with distribution rates that are among the lowest in Ontario and earn greater dividends for its municipal shareholders. PowerStream was created in 2004 as a result of the merger of Hydro Vaughan, Markham Hydro and Richmond Hill Hydro. In 2005, the utility purchased the assets of Aurora Hydro Connections from the Town of Aurora and then merged in 2009 with Barrie Hydro. In 2012, PowerStream formed a strategic partnership with the Town of Collingwood in the ownership and operation of Collus PowerStream.

Backgrounder

On April 16, 2015, four of Ontario’s largest electricity distribution companies (LDCs) announced they would work together to form a new utility company that would serve almost one million customers in York Region, Simcoe County, Peel Region, Hamilton and St. Catharines.

The transaction involves a merger of PowerStream, Enersource, and Horizon utilities, and an acquisition of the regulated electricity distribution business of Hydro One Brampton Networks Inc.

If the transaction receives regulatory approval, the new company, with close to one million customers and $2.7 billion in assets, will be the fifth largest LDC in Canada and the second largest municipally-owned LDC in Ontario based on customers served.

The City of Markham currently owns 34.2% of PowerStream through its holding company, Markham Enterprises Corporation (MEC). The City of Vaughan owns 45.3% and the City of Barrie owns the remaining 20.5% of PowerStream.

Under the new company, referred to for now as “MergeCo”, the former PowerStream shareholders will own approximately 46%, Enersource (City of Mississauga and BPC Energy Corp.) will own 31% and Horizon (Cities of St. Catharines and Hamilton) 23%.

Of the 46% of ownership held by the former PowerStream shareholders, Markham would own 15.7% of MergeCo with an equity investment of between $43M and $47.3M.

The three PowerStream shareholders retained independent consultants Navigant Consulting Ltd., BDR North America Inc. and Gowlings LLP to provide strategic financial and legal advice.

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