The Ontario Energy Board (OEB) has approved Hydro One’s purchase of the business and distribution assets of Peterborough Distribution Inc. (PDI) from the City of Peterborough.
The deal for $105 million includes plans for Hydro One to invest in a new operations centre and fleet maintenance facility in Peterborough.
The OEB also approved Hydro One’s application to purchase Orillia Power Distribution Corporation from the City of Orillia in a deal worth $41.3 million
Peterborough city council approved Hydro One’s proposal to buy PDI in December 2016. In August 2018, Hydro One announced the parties had reached a definitive agreement that was then submitted to the OEB for its consideration.
The city’s decision to sell PDI was met with opposition from several organizations and community groups, including the Save PDI Coalition, which made submissions to the OEB.
The Save PDI Coalition argued the sale would increase rates for PDI customers and result in loss of municipal control over PDI. The coalition also argued that Hydro One would be less likely to to adapt to the future needs of a small city like Peterborough.
When evaluating the PDI deal, the OEB used its “no harm test” to evaluate whether a proposed transaction will have an adverse effect on OEB’s statutory objectives under the Ontario Energy Board Act, which consider price, economic efficiency, and cost effectiveness.
The OEB’s decision is complicated but, in responding to concerns expressed by the Save PDI Coalition, the OEB concludes the deal offers the potential for cost savings for both existing and new customers.
In its decision, the OEB also states it does not consider a community’s desire to maintain local control of a utility, unless there is evidence a change in control would have a negative impact on the OEB’s statutory objectives. The OEB states there is no evidence a loss of local control would have a negative impact on those objectives.
With the OEB’s approval, the deal is expected to close with the next few months. The deal includes a one per cent reduction in base distribution rates for PDI electricity customers, along with a five-year rate freeze followed by increases aligned with inflation for years six to 10, subject to OEB approval of rates. PDI workers will receive offers for employment with Hydro One with a 12-month service and location guarantee and recognition of past service for seniority purposes.
“Hydro One’s purchase of PDI brings new investments and combines the city’s electricity distribution network with Hydro One’s substantial presence in the broader Peterborough region to bring value and enhance service,” says Peterborough Mayor Diane Therrien. “The city looks forward to working with Hydro One on its planned construction of a new regional operations centre and fleet maintenance facility in Peterborough, once the deal has closed.”
PDI is the electricity distribution company of the Peterborough Utilities group of companies. The City of Peterborough is the sole shareholder of City of Peterborough Holdings Inc., which is the parent company of Peterborough Utilities.
PDI serves approximately 37,000 customers in the City of Peterborough and villages of Lakefield and Norwood.
After debt and other liabilities related to PDI, the city is expected to receive $50 million to $55 million from Hydro One’s purchase of PDI. Council is considering how to invest the revenue as part of its 2021 budget process, including options such as creating a legacy fund for long-term returns to the community and re-investing in Peterborough Utilities to support renewable energy projects with ongoing returns on the investment.
Ontario Energy Board Decision and Order for PDI sale – April 30, 2020
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