Letter from Hydro Ottawa president re: Hydro One Customers
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Hydro Ottawa Limited / Hydro Ottawa limitée 3025 Albion Road North, PO Box 8700 / chemin Albion Nord, C.P. 8700 Ottawa, Ontario K1G 3S4 www.hydroottawa.com 1 December 22, 2015 via email His Worship Mayor and City Council City of Ottawa 110 Laurier Avenue West Ottawa, Ontario K1P 1J1 Dear Mayor Watson and Council, Re: Hydro One In June of this year, the Chair of Hydro Ottawa and I met with the Chair of Hydro One and their Chief Executive Officer/President in Ottawa to discuss the long-standing issue of acquiring the existing Hydro One customers with the City of Ottawa limits. That meeting took place as a result of the joint efforts of the Minister of Energy, Bob Chiarelli and our Mayor. At our most recent Annual General Meeting before City Council, the Chair of Hydro Ottawa, Mr. Jim Durrell, provided a verbal update on the meeting and the next steps, as well as a commitment to keep our shareholder informed as to the status of the discussions. Since that meeting, senior officials from both Hydro Ottawa and Hydro One, including the CEOs, have met and exchanged detailed financial data and models. Several options were presented and discussed. Unlike previous efforts to acquire these customers, Hydro One staff were very open and transparent with their financial information and the modelling that underpinned their valuation. While the process and the final valuation remains covered by a confidential non- disclosure agreement, Hydro Ottawa is prepared to acknowledge that the valuation placed on these customers by Hydro One is both valid and defensible. Unfortunately, and with regret, we are unable to conclude a commercial agreement with Hydro One to acquire these 45,000 customers in the outlying areas of the City of Ottawa. Hydro Ottawa and Hydro One operate in a heavily regulated industry. Approval from the regulator, the Ontario Energy Board would be a requirement to effect any transfer or sale of customers from one utility to another. As part of any purchase/transfer process, the Ontario Energy Board, would need to be satisfied that the transfer of these customers meets their statutory objectives - a primary one being to protect the interests of consumers with respect to prices. Acquiring these customers at a price that would satisfy this “no harm” test would be financially irresponsible on the part of Hydro Ottawa. Conversely, disposing of or agreeing to sell these Hydro One customers to Hydro Ottawa below this price would be rejected by the Ontario Energy Board as potentially causing “harm” to existing Hydro One customers.
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Transcript of Letter from Hydro Ottawa president re: Hydro One Customers
Hydro Ottawa Limited / Hydro Ottawa limitée 3025 Albion Road North, PO Box 8700 / chemin Albion Nord, C.P. 8700 Ottawa, Ontario K1G 3S4 www.hydroottawa.com
1
December 22, 2015 via email
His Worship Mayor and City Council City of Ottawa 110 Laurier Avenue West Ottawa, Ontario K1P 1J1
Dear Mayor Watson and Council, Re: Hydro One In June of this year, the Chair of Hydro Ottawa and I met with the Chair of Hydro One and their Chief Executive Officer/President in Ottawa to discuss the long-standing issue of acquiring the existing Hydro One customers with the City of Ottawa limits. That meeting took place as a result of the joint efforts of the Minister of Energy, Bob Chiarelli and our Mayor. At our most recent Annual General Meeting before City Council, the Chair of Hydro Ottawa, Mr. Jim Durrell, provided a verbal update on the meeting and the next steps, as well as a commitment to keep our shareholder informed as to the status of the discussions. Since that meeting, senior officials from both Hydro Ottawa and Hydro One, including the CEOs, have met and exchanged detailed financial data and models. Several options were presented and discussed. Unlike previous efforts to acquire these customers, Hydro One staff were very open and transparent with their financial information and the modelling that underpinned their valuation. While the process and the final valuation remains covered by a confidential non-disclosure agreement, Hydro Ottawa is prepared to acknowledge that the valuation placed on these customers by Hydro One is both valid and defensible. Unfortunately, and with regret, we are unable to conclude a commercial agreement with Hydro One to acquire these 45,000 customers in the outlying areas of the City of Ottawa. Hydro Ottawa and Hydro One operate in a heavily regulated industry. Approval from the regulator, the Ontario Energy Board would be a requirement to effect any transfer or sale of customers from one utility to another. As part of any purchase/transfer process, the Ontario Energy Board, would need to be satisfied that the transfer of these customers meets their statutory objectives - a primary one being to protect the interests of consumers with respect to prices. Acquiring these customers at a price that would satisfy this “no harm” test would be financially irresponsible on the part of Hydro Ottawa. Conversely, disposing of or agreeing to sell these Hydro One customers to Hydro Ottawa below this price would be rejected by the Ontario Energy Board as potentially causing “harm” to existing Hydro One customers.
Hydro Ottawa Limited / Hydro Ottawa limitée 3025 Albion Road North, PO Box 8700 / chemin Albion Nord, C.P. 8700 Ottawa, Ontario K1G 3S4 www.hydroottawa.com
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While we are disappointed with this outcome, I can assure the shareholder that every effort was made over the past 6 months to correct and remedy this historical mistake. At this time, I would like to sincerely thank both the Mayor and the Minister of Energy for facilitating this last effort to acquire these customers on a commercial basis. Hydro Ottawa remains committed to providing best in class service to our existing customers in a cost-effective and reliable manner and to growing our renewable energy generation business. Should you have any questions or wish to arrange a briefing on this matter, please do not hesitate to contact me at 613-738-5499 ext. 203. Sincerely,
Bryce Conrad President and Chief Executive Officer/Président et chef de la direction Tel. / tél. 613-738-5499 | ext. / poste 203 Fax / Téléc.: 613 738-5498 [email protected]
cc: Kent Kirkpatrick, City Manager, City of Ottawa Jim Durrell, C.M., Chair, Board of Directors
