Duane Hicks
Energy minister Bob Chiarelli said last week that the province will not force Local Distribution Companies (LDCs) to consolidate as a cost-savings measure.
But the chair of the Fort Frances Power Corp. is warning the local utility is not out of the woods just yet.
“The fight isn’t over,” Doug McCaig said in an interview Thursday, adding that although the mergers may not be legislated, LDCs still may be forced—one way or another—to consolidate.
McCaig, fellow FFPC director Deane Cunningham, and FFPC CEO and president Joerg Ruppenstein attended a meeting with the Electricity Distributors Association (EDA) last week, as well as the dinner at which Chiarelli made his announcement.
“[The province has] obviously rescinded the part of it that says they’re going to go for amalgamation on a legislative basis,” noted McCaig, adding he wasn’t too surprised about this as the FFPC previously had raised the issue as to whether forcing utilities to merge was illegal.
He reasoned the FFPC is a private corporation, owned by shareholders (i.e., the people of the Town of Frances), and he didn’t feel the province could direct a utility such as it to amalgamate no more than it could tell Bell Canada what to do.
“I think these things were staring them in the face and getting them to change their mind,” McCaig said.
“[But] it doesn’t mean they’re not going to try to get people to amalgamate,” he warned.
“What it means is they can put themselves in the position that, through the regulator, they can put up barriers that are maybe going to force us to.”
For example, regulations could be changed to make it a requirement that LDCs “re-base” every five years.
“Re-basing is when you have to re-evaluate the status of your utility—everything in it and how you’re serving the public and everything else,” McCaig explained.
“They put this all together and they look at you—it’s to determine if your application [to distribute energy] is valid.
“The fact is, it costs a lot of money,” he added. “It’s so expensive now; it’s much more expensive than it ever was before and I’ve been in the business 40 years,” he noted.
“If we have to do it every five years, it could cost a couple hundred thousand dollars to do that,” he figured. “It could drive the price of electricity up, and as a result of that, they could make it so you couldn’t do it as a small utility.
“Large utilities, like Toronto, Windsor, or somebody like that, could swallow it.”
While in Toronto, McCaig presented the FFPC’s case to the EDA prior to Chiarelli’s announcement.
“I said we were concerned about what’s going to happen,” he recalled. “This was put to them before the announcement was made because we kind of knew that they were going to rescind it.
“I said, ‘How about the rest of it? Are we going to be negotiating with the OEB [Ontario Energy Board] in order to say, are you going to make it difficult for small utilities to stay alive?’” he added.
The FFPC received assurance from the EDA that it would look into the matter.
The three FFPC reps also spoke to OEB CEO and president Rosemarie Leclair to see what kind of assurances they would get.
“We didn’t really get anything,” McCaig lamented.
“So really, it’s kind have gone around and around, and the problem is still there and it’s still significant,” he stressed.
“We’ll be working on it, and we’re doing our very best to fight this thing and retain our utility,” he vowed.
“It’s going to be a tough fight, and it’s going to be ongoing,” McCaig admitted. “We’re probably going to be good for a while, I think, but it’s going to catch up to us, I am sure.
“When they come at you with regulatory regimes, it’s pretty difficult, you know?
“I hate to get political but we’ve got to have a change in government,” he argued.
Last December, an expert panel recommended Ontario’s 80 LDCs voluntarily should amalgamate into larger, regional agencies within the next two years.
The panel has 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 the FFPC and members of town council actively have been voicing their opposition to the proposal.
They cite any merger negatively could affect local hydro rates, as well as jeopardize the historic power agreement with H20 Power.
