Kitchener Power Corporation and Waterloo North Hydro Holding Corporation Announce Proposed Merger
Local Hydro Providers Announce Proposed Merger
Kitchener/Waterloo/Wellesley/Wilmot/Woolwich, Ontario – After thorough discussions and in-depth analysis, Kitchener Power Corporation and Waterloo North Hydro Holding Corporation today announced a proposed merger of their local power utilities, Kitchener-Wilmot Hydro and Waterloo North Hydro. The municipalities of Kitchener, Waterloo, Wellesley, Wilmot and Woolwich are the shareholders of the two holding corporations.
Like several other local power utilities in communities across Ontario, Kitchener-Wilmot Hydro and Waterloo North Hydro are considering taking the next step in their ongoing collaboration efforts by combining operations to create a larger, local and publicly-owned power utility that will provide reliable service, invest in new technologies, generate cost savings through operational efficiencies and keep local jobs in our communities.
If approved by the five municipal councils and the Ontario Energy Board, combining the two utilities would create the seventh largest utility in Ontario by number of customers. A larger customer base will allow the combined utility to focus on efficiency and innovation to better provide for the needs of our growing communities.
With a proposed contiguous service territory serving the municipalities of Kitchener, Waterloo, Wellesley, Wilmot and Woolwich, customers will benefit from having a larger, local and publicly-owned utility that can maintain the highest quality of service for customers while having the capacity to modernize and adapt to significant changes in Ontario’s electricity sector. The combined utility will have more resources to invest in new technologies that benefit customers, such as managing smart home and energy data, automated restoration of power outages, microgrids and local renewable generation.
The size and stability of the combined utility will help ensure distribution rates remain competitive and stable for customers. Distribution rates for all customers are projected to increase at less than the rate of inflation over the 10 years following the merger, leaving more money in customers’ pockets. Thereafter, the combined utility will harmonize distribution rates over time between Kitchener-Wilmot Hydro and Waterloo North Hydro customers.
Residents stand to benefit from the larger, local and publicly-owned utility as municipalities are projected to receive an increase in incremental dividends and interest on their investment over the 10-year period following the merger. Municipalities can re-invest these dividends into local services that residents rely on.
Residents, through the five municipal stakeholders involved in the merger, will continue to have oversight of their local power utility. Each municipality will receive proportional ownership in the combined utility and representation on the new Board of Directors.
This announcement is accompanied by the launch of a community website, connectinglocalpower.ca, where residents of all five municipalities can visit to learn more.
Layoffs are not expected at either utility company because of the merger.
There are vacancies that have not been filled and some pending retirements. The head office will be the current Kitchener-Wilmot Hydro office in the City of Kitchener, with a second work location at the current Waterloo North Hydro office, at which activities will include leading innovation and new technology development.
A Memorandum of Understanding (MOU) for the proposed merger will be presented to all five participating municipal councils for approval on Monday, October 4 and Tuesday, October 5.
Kitchener-Wilmot Hydro and Waterloo North Hydro are committed to engaging customers and employees through timely, respectful, transparent and reliable communication throughout this entire merger process. Community engagement is expected to begin the first week of October 2021, subject to municipal council approvals of the MOU. The planned community engagement will include public information sessions and information available on a new community website: connectinglocalpower.ca.
Following the community information and engagement initiative, the five municipal councils are expected to make a final decision on the proposed merger in December 2021. If approved by the municipal councils, the merger application will be submitted thereafter to the Ontario Energy Board for regulatory approval, which is expected in the third quarter of 2022. The new company is expected to begin operations soon after regulatory approval.
“By combining with Kitchener-Wilmot Hydro, our board believes this is a good deal for Waterloo North Hydro customers and our shareholders in Waterloo, Woolwich, and Wellesley. Ontario’s electricity sector is changing quickly and this proposed merger is a local solution that will help our communities adapt to these changes and thrive in the years ahead. This larger, locally-owned utility will have more resources to invest in technologies that benefit customers while helping our communities’ transition to a lower carbon economy.”– David Petras, Chair, Waterloo North Hydro Holding Corporation.
“Waterloo North Hydro is a natural merger partner for Kitchener-Wilmot Hydro given the utilities’ shared values, strong record of dedicated service to customers and vision to build a stronger utility that can invest in our future. This is a win-win-win scenario for customers, municipal shareholders and employees. When it comes to service, customers will benefit from having the same reliable service - and more - as the combined utility will have greater resources to invest in new technologies. From a financial standpoint, this merger is a win for customers and municipal shareholders as the combined utility will keep rates competitive while reducing costs through operational efficiencies. And when it comes to employees, this local merger will keep jobs here in our community.” - Jim Phillips, Chair, Kitchener-Power Corporation.