Duane Hicks
An expert panel recommended last week that Ontario’s 80 local electricity distribution companies (LDCs) should voluntarily amalgamate into larger regional agencies within the next two years.
But the Fort Frances Power Corp. is among those staunchly opposed to such changes.
FFPC chair Doug McCaig said Friday that the FFPC has been actively voicing its opposition to the proposed mergers for some time—and will remain steadfast.
McCaig, along with FFPC president and CEO Joerg Ruppenstein, had a conference call with the Electricity Distributors Association (EDA) on Friday, joining the other 79 utilities across the province.
At that time, EDA president and CEO Charlie Macaluso voiced his opposition to the changes, and other utilities also had their say.
“There’s all kinds of opposition,” McCaig remarked. “Neither the NDP nor the Conservatives support what [the review panel] is saying, and neither does the [Association of Municipalities of Ontario].
“Everybody is opposing it.”
McCaig, Ruppenstein, and other FFPC board members personally voiced their complaints to Ontario PC leader Tim Hudak when he was in Dryden earlier this month.
Shortly after that, they met with local MPP Sarah Campbell and explained why they are opposing the changes.
Back in August, McCaig’s son, Fort Frances CAO Mark McCaig, and Mayor Roy Avis met with Energy minister Chris Bentley in Ottawa and personally gave him the reports from both the town and FFPC opposing the aggregation.
McCaig also spoke to Floyd Laughren, who sits on the tripartite expert panel along with fellow former cabinet ministers Murray Elston and David McFadden, and voiced the FFPC’s position.
Those complaints also have been registered with the provincial government.
In the plan, which now has been passed on to the provincial government, the expert panel recommended the utilities should indicate within six months that they are moving towards an aggregation of some sort or another.
And if that doesn’t happen within two years, mergers will be legislated, warned McCaig.
This comes with a number of caveats, not the least of which is whether the Liberal government will be in power two years from now, he added.
McCaig explained the province’s “reasoning” behind electrical distributors merging is to reduce the number of utilities and, therefore, cut costs.
“It means they would have one manager, one billing, stuff like that,” said McCaig. “[But] we’re doing some of that right now.
“For instance, Thunder Bay Hydro does our billing for us. We also get some other work done by them.
“But if we go into a business partnership with these people—Thunder Bay has 37,000 [customers], we have 3,700,” he noted.
“We wouldn’t be much of a player.
“What they’re saying also in the report is you have to have a utility that is at least 400,000 customers,” McCaig added.
“That utility would be from Sault Ste. Marie to the Manitoba boundary.”
Elston, who chairs the expert panel, said the changes to the electricity distribution system would save $1.2 billion over 10 years and make it less costly for regional utilities to borrow money to upgrade their systems,
But McCaig said he doesn’t see how this can benefit the FFPC. And, in fact, any merger could negatively affect FFPC rates, as well as jeopardize the historic power agreement with H20 Power.
“All of these things are going to be threatened—I think we’ll protect them—but as I’ve told you in the newspaper before, we can stand back and bitch about it or do something,” he reasoned.
“We’re doing something,” McCaig asserted. “We’re on the move right now, and we’re going to stay that way.”
McCaig said the process of merging utilities is “so convoluted it would take years to get the thing going.”
“So, it’s going to die. I am sure of it,” he noted. “I guess that’s my prediction, so take it for what it’s worth.”
McCaig said he’s been involved with the FFPC and its predecessor for 40 years, and sat on the Hydro One and EDA boards, and it still seems that the first thing the politicians in Toronto forget is the regional differences in this province.
“We don’t have shoulder-to-shoulder utilities around here,” he stressed, adding the nearest utility is Hydro One, whose rates are much higher than those of the FFPC.
“It really frustrates me,” McCaig admitted. “They tell you bigger is better, but we have got the cheapest rates in the province, and if you take away that nice little package at 4,000 horsepower a year that we have with [H2O Power], we are the third-lowest in the province.
“And I think we’re financially good,” he added. “We have a little bit of money in the bank. We’re doing fine, and they’re telling us they got a better deal?
“I’ve got to see it.”
Under the proposed plan, there would be two electricity distributors in Northern Ontario while already-large utilities, such as Toronto Hydro, would remain unchanged.
Hydro One, which bought up 88 local distribution companies in the 1990s, would be the dominant player among the new regional distribution utilities outside Toronto.
The FFPC is among many opposed to the idea of merging utilities.
According to the Canadian Press, the Ontario NDP have said a recommendation from the panel to remove a tax on private investments in the sector opens the door for more privatization, which will translate into higher rates for consumers.
“The most important thing, and the worst thing in this report, is the opening of the door to privatization,” charged NDP energy critic Peter Tabuns.
“I think that’s bad news for Ontario, and is going to mean higher costs and less local control.”
Meanwhile, the Progressive Conservatives have said there are savings to be achieved through consolidation in the sector, but the key words is “voluntary.”
“The Ontario PCs believe any consolidations among LDCs should be voluntary, and supported by eliminating the transfer tax,” PC energy critic Vic Fedeli said in a press release last week.
“The ultimate goal should be to lower hydro bills for families by creating stronger utilities with lower operations, maintenance, and administrative costs,” he added.
“However, as this proceeds, it’s important to recognize that what may work in one part of the province may not work in another,” Fedeli warned.
“Local input must be part of the final picture,” he stressed.
