Proposed merger of Barrie Hydro and PowerStream expected to save in excess of $5 million annually Merger would help reduce upward pressure on distribution rates

SIMCOE COUNTY & YORK REGION, ON – A business case analysis conducted by KPMG on a proposed merger of two local electricity distribution companies, PowerStream and Barrie Hydro, has concluded that efficiencies realized through combining assets and achieving economies of scale is expected to net a merged entity annual savings in excess of $5 million.

The analysis is the impetus behind a negotiated merger agreement, which still requires the approval of both companies’ respective boards of directors, shareholders as well as the Ontario Energy Board. Based on the analysis, it is believed that a merger will also increase dividend payments to the municipalities that hold shares in the utilities and help to reduce the upward pressure on customer distribution rates.

The draft agreement between PowerStream and Barrie Hydro calls for PowerStream’s current shareholders, the City of Vaughan and the Town of Markham, to respectively retain 44-46 and 34-36 percent ownership of a merged utility, while Barrie Hydro’s shareholder, the City of Barrie, will have an 18-21 percent share. The draft agreement also sets out a governance structure in which certain decisions would require the unanimous consent of all three shareholders.

“If approved, a merger of Barrie Hydro and PowerStream will help to establish a strong regional electricity distribution utility which will be better able to serve its customers and meet the challenges of an ever-changing industry,” Mark Henderson, Barrie Hydro President and CEO explained. Brian Bentz, President and CEO at PowerStream, concurred with Henderson’s analysis of how a merger will benefit customers and result in significant cost savings. He also commented on how operational and cultural similarities in the two organizations will help to facilitate a smooth transition following a merger.

“Both utilities serve growing municipalities, have been actively involved in mergers and acquisitions and are community and employee focused,” Bentz said, adding how a significant number of PowerStream employees are residents of the City of Barrie and Simcoe County.”

A new thirteen-member board of directors would provide the required governance following the merger. The City of Vaughan would be represented by six members on the board of directors with the Town of Markham and the City of Barrie being represented by four and three members respectively.

The draft merger agreement also specifies that there will be one head office in Vaughan and a minimum of two operations/administration centres, one of which will be located in the City of Barrie. There will also be no layoffs of union or management staff at either PowerStream or Barrie Hydro directly as a result of the merger. Agreements pertaining to a number of key labour issues, including job security, relocation of positions and seniority rights, have been ratified by the two companies and their respective unions.

Prior to final decisions on the draft agreement being made by the various shareholders, information sessions on the proposed merger will be scheduled for public comment and input.

Barrie Hydro is the 12th largest local electricity distribution company in Ontario, serving more than 70,000 customers in seven service areas. PowerStream is the Province’s third largest power distribution utility with more than 240,000 customers across four municipalities. A merger of the two utilities will create the second largest local electricity company in Ontario.