Rainy River pulls plug on electric utility

Rainy River council flip-flopped last Friday and decided to sell the Rainy River Electric distribution system to Hydro One after all.
This after a motion to sell it a week ago Monday (Oct. 30) was defeated by a tie vote.
Changing their vote was Mayor Gord Armstrong and Coun. Gerry Marchuk. Both had voted against the sale the first time around along with Coun. Bill Marmus, who stood his ground Friday and voted “no” again.
While the issue appeared to be dead after last Monday’s special council meeting, Hydro One sweetened the pot the following day with even more money–and a new spin on the deal.
This was the second time Hydro One had upped the ante.
The day after a public meeting was held, at which the majority of the public expressed opposition to the sale of the utility, Hydro One upped its offer from $427,000 to $447,000.
But that offer included the liquid assets of the utility, which, based on last year’s financial statements, were about $123,000.
Then last Tuesday, Hydro One offered the town $447,000 plus the liquid assets. That should put the final offer at more than $500,000–depending upon when the offer receives final approval and how much cash Rainy River Hydro Inc. has in the bank.
Mayor Armstrong said the main reason he changed his vote was the difficulty the town has been having with the unbundling of the power bills.
A program from the government has not been working for Rainy River. If its bugs are worked out, it will effectively itemize hydro bills much the same way as natural gas one are already.
In other words, it will break down the transportation charges of the power as well as other charges.
Mayor Armstrong also noted the Nov. 7 deadline offered them no flexibility. “We tried to get it changed but the government wouldn’t budge,” he said.
If council sold after Nov. 7, the town would be subject to a 33 percent income tax and hence would have to pay one-third of any offer it accepted to the provincial government.
Coun. Marchuk said he basically changed his mind because of what mayor-elect Gord Prost told council. “He said that he and the new council are going to sell it anyways.”
Coun. Marchuk said he regretted council did not do a better job of negotiating, and expressed concern they did not go to Hydro One requesting more money, rather than letting them come back with offers of more money.
“I regret we did not get more money,” he said Friday. “Time will tell if we were right.”
But Coun. Marmus reiterated he did not feel comfortable voting in favour of the sale with so many unanswered questions.
Coun. Ed Tymkin said council does not know whether it is closing doors on other options but voted for the sale anyway. Couns. Marilyn McAlister and Larry Armstrong also voted yes.
Mayor Armstrong had asked for public input from the gallery before council voted. Rainy River resident Pat Giles, clerk of Dawson and Lake of the Woods townships, asked if the customers in Rainy River would have to pay the current Hydro One basic monthly service charge of $28 plus GST.
He said that based on that figure, his hydro costs for his office building in Rainy River would rise by $200 per year.
Council could not give him an answer.
Giles also estimated that if it is charged, Hydro One will have made back its offer to purchase in less than six years.
Meanwhile, local businessman John Pirkl suggested there could be another option other than selling the utility. He said there must be a considerable number of municipalities that aren’t selling their utilities and he thought council could get some ideas from them.
He presented them with one scenario that would see the town loan the money to the new Rainy River Hydro Inc. so it could start up, then the town would get paid back money it could use for whatever it wanted and the utility would remain locally-owned.
Another suggestion that other companies, like North Star Electric of Baudette, Mn., might be interested in buying Rainy River’s distribution system was killed Friday.
A phone call during the meeting from North Star indicated it would be interested in selling Rainy River customers’ power, not purchasing the distribution system.
With council’s approval of the sale Friday, Clerk-Administrator Deb Bowman had to log some long hours over the weekend and get the deal to Winnipeg, where a representative from Hydro One flew in and signed it.
It then had to be delivered in person to the Ontario Energy Board by 10 a.m. yesterday (Tuesday) or it would not be accepted.
The O.E.B. still has to review the deal and could kill it. But it is expected that if all goes well, it will be about March when everything will be finalized.