Duane Hicks
With the province proposing to consolidate Local Distribution Companies (LDCs), the Fort Frances Power Corp. is being proactive to make sure the local utility remains as it is—highly-efficient and delivering some of the lowest rates anywhere in Ontario.
At its regular meeting last week, town council authorized the FFPC to prepare and deliver presentations on the matter of LDC consolidation, reasoning that the FFPC’s board of directors has extensive knowledge of the electricity sector, including aggregation, amalgamation, and consolidation of utilities, and so are best-suited to advocate “to retain the preferential rate structure our electrical consumers currently enjoy whether future restructuring is legislated or on a voluntary basis.”
“We can’t sit on our hands and wait for it to happen, and then start bitching and whining,” stressed FFPC chair Doug McCaig.
“We’ve got to present our arguments to the proper people and that’s exactly what I am going to do—try to make our voice heard,” he vowed.
McCaig said the FFPC approached Mayor Roy Avis, who also sits on the FFPC board, about bringing their concerns directly to the province-appointed panel undertaking a review of Ontario’s electricity sector.
He clarified the FFPC no longer is a political entity (i.e., its board is appointed, not elected), so it needs the authorization of the Town of Fort Frances in order to bend the province’s ear.
This authorization was granted last week.
“[Now] we will be talking with some political clout,” McCaig explained.
McCaig said the province assembled a review committee earlier this year to look at having fewer utilities in Ontario. At one time, there were 304 utilities across the province, although that number has since dwindled to 77.
But McCaig speculated the province would like that number eventually trimmed down to only seven or eight utilities.
The idea behind the consolidation is that “bigger is better,” but McCaig said “that is not necessarily so.”
“We have some argument against that,” he remarked. “The structure of our utility, it’s very lucrative to the Town of Fort Frances.
“We enjoy the cheapest rates in the province, we’ve done some pretty good things here.
“The infrastructure is probably a hell of a lot better than anybody else’s around,” he added.
“Our utility runs very efficiently,” McCaig stressed. “We’ve got a good manager, we’ve got good staff there, good linespeople, and we’re pretty proud of our record.
“And everything here is homegrown, by the way.”
McCaig noted that down the road, area utilities might have to consolidate with either Hydro One or other utilities in the region on a voluntary basis or on a legislative basis—and neither option would be appealing.
“What we’re worried about is, number one, if it’s on a volunteer basis, they’ll make it so difficult for us to survive with the regulatory regime as it is, with the OEB and all the rest of them, that it would be very difficult,” he explained.
“We would have to do the exact same thing that a large utility, like a Hydro One or a City of Toronto, [has to do] and as a result, they could bury us,” he warned.
“With the legislative [alternative], you don’t know what’s going to happen,” he continued. “This is fine when you have aggregated utilities, where you’ve got a shoulder-to-shoulder sort of thing, such as you have down east. . . .
“The fact is, who do we partner with? Who do we go with?” McCaig wondered.
“Do we have to go with Hydro One—that’s the only one that we’re shoulder-to-shoulder with. Or do we try to form a partnership with Thunder Bay or Kenora?
“Dryden has been sold off to Hydro One already, and I think a lot of other utilities in the northwest are in danger of doing that,” McCaig added.
At last week’s council meeting, Mayor Avis noted the proposed consolidation of LDCs, including the FFPC, “could prove to be detrimental to the premium rates that we now enjoy.”
He added that even without factoring in the power agreement credit, Fort Frances’ rates rank the third-lowest in the province—and those rates are something the community cannot afford to jeopardize.
“If we were to partner with Hydro One, obviously what’s going to happen to the rates? They’re going to skyrocket,” echoed McCaig.
“We are against that sort of thing unless we can have a rate structure just within our community.”
Buying up Hydro One jurisdiction also is a possibility, but McCaig noted “the fact is, on a business case basis, why would we want it?”
“It’s a very expensive proposition to run,” he conceded. “I realized this from when I sat on the Ontario Hydro board and also Hydro One—they would be glad to get rid of all of this moose pasture up here.”
No matter what happens, the 1905 historic power agreement—which ensures power sold to the town at a reasonable price—will remain intact, FFPC CEO and president Joerg Ruppenstein noted this morning.
“If restructuring was forced, the integrity of the agreement should not be affected,” he explained.
“Really, the agreement is outside the Ontario electricity market,” Ruppenstein added.
“It’s origin is really a Supreme Court of Canada ruling and that ruling established the agreement. . . .
“It’s a separate benefit our community has.”
McCaig said he and the FFPC board know some of the members on the provincial review panel, and he’s certain the panel will be receptive to their presentation.
But they’ll still have to work to get their message through.
“The biggest singular thing is the province is not recognizing regional differences,” said McCaig. “They’re looking at us as they would anybody else, and it’s just not fair.
“Whether or not they’d like to believe it, Northwestern Ontario is a little bit different than the rest of the province.
“So we have to convince them of that,” he stressed.
