OPC Sale Approved
City of Orillia Press Release
In a decision dated April 30, 2020, the Ontario Energy Board (OEB) approved the sale of Orillia Power Distribution Corporation (OPDC) to Hydro One Inc. (Hydro One).
The sale includes the purchase of all shares of Orillia Power Distribution Corporation for $26.35 million and the assumption of approximately $14.9 million of debt, for a total transaction value of $41.3 million, subject to closing adjustments. It is anticipated the sale will officially close in the coming months.
The City of Orillia is retaining complete ownership of the Orillia Power Generation Corporation, the jewel of the Orillia Power Corporation, whose rich heritage, innovation and success in generating electricity continues to thrive.
“During such a challenging economic climate due to COVID-19, the Ontario Energy Board’s approval of the sale of OPDC to Hydro One and the significant investments to be made in Orillia as a result of this decision is a beacon of light. The sale of the distribution arm of Orillia Power to Hydro One will bring tremendous growth and investment to the City of Orillia,” said Mayor Steve Clarke.
After the deal has closed, Hydro One plans to construct a provincial warehouse and a regional operations centre in Orillia’s Horne Business Park. This is in addition to the state-of-the-art primary Ontario Grid Control Centre already under construction on the site; Hydro One anticipates this facility being home to approximately 150-250 high-quality jobs.
“We look forward to welcoming our new customers and employees to the Hydro One family,” said Mark Poweska, President and CEO, Hydro One. “This strong partnership will energize life in the City of Orillia for years to come through our continued investment in exceptional customer service, safe and efficient operations, and community initiatives. We would like to thank Mayor Clarke, Orillia City Council, and the OPDC team for their dedication and partnership.”
It is estimated that the Hydro One investments will bring approximately $200 to $300 million in near-term economic impact to the City and provides real, short and long-term economic development benefits for the community through significant investment, including highly-skilled, knowledge-based jobs and potential spin-off benefits.
“Orillia customers will have a guaranteed one per cent reduction in base distribution rates for the next five years, along with only inflationary increases between years six and 10. We are confident that Hydro One will continue to provide Orillia customers with the safe and reliable service we are accustomed to from Orillia Power and we look forward to welcoming them as strong community partners. Through successful negotiations, patience and determination, the City was able to meet all of its guiding principles. We have secured a deal that serves the best interests of Orillia, includes significant economic growth, consumer price stability and preserves Orillia Power distribution jobs,” said Mayor Clarke.
OPDC will continue to operate as usual during the transition to Hydro One. OPDC employees will be transferred to Hydro One with similar pension and benefits, along with a one-year location guarantee.
“Hydro One has proven its firm commitment to investing in the Orillia community,” said Gayle Jackson, Chief Administrative Officer for the City of Orillia. “We look forward to continuing a strong corporate partnership as our organizations bring innovation, growth and new opportunities to the City.”
The negotiations between the City of Orillia and Hydro One formally started in September 2015. Orillia Council undertook two formal public consultations and numerous meetings throughout the community to enable the public to provide comments on the opportunity. In August 2016, a final deal was reached between the City of Orillia and Hydro One. Submission to the OEB for approval took place in September 2018. A backgrounder is attached with more timeline information.
Highlights
- Economic Impact: Three new facilities being built on the Horne Business Park in West Orillia.
- Primary Ontario Grid Control Centre (currently under construction)
- Provincial Warehouse
- Regional Operations Centre
- Orillia Power Distribution sold: $26.35 million cash purchase by Hydro One.
- Horne Business Park land sale: Hydro One has purchased 16.41 acres of the land required for the Ontario Grid Control portion of the development for approximately $3 million – validated as fair market value by a third-party valuator. Hydro One intends to make further land purchases for the two additional facilities after the deal closes.
- Orillia consumers protected: Current Orillia Power customers will benefit from a one per cent reduction in base distribution rates. Distribution rates account for approximately 20 per cent of the overall bill (the remainder is set based on market costs at the provincial level). These reduced rates will be frozen for five years, with only inflationary increases from years six to 10. Distribution rates after year 10 would need to be reviewed and approved by the OEB.
- OPDC jobs protected: All OPDC employees are moving to Hydro One with comparable pay, benefits and pension, along with a one-year location guarantee.
- Orillia Power Generation Corporation: City retains complete ownership, along with annual dividend which accounts for approximately 78 per cent of the overall Orillia Power Corporation dividend.
- Orillia Legacy Fund: City to deposit approximately $36 million from the deal to an Orillia Legacy Fund, which will likely generate investment income in excess of the existing OPDC portion of the annual dividend.
- Philanthropic investment: Hydro One is planning to provide $250,000 through its community investment program to the City for community purposes and has corporate programs in place to continue philanthropic support in the Orillia community. Hydro One has already demonstrated its strong commitment to the community through financial support of the Ontario Winter Games and the Mariposa Folk Festival.
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