It’s Official, Hydro One Takes Over
By John Swartz
Two questions SUNonline/Orillia had during the 5 years between when Mayor Steve Clarke announced to the community Hydro One came knocking in search of a utility to buy and today’s press conference to mark the finalization of the sale of Orillia Power Distribution Corporation were answered today.
Hydro One officials over that time maintained the control center proposed to be built was a back up facility. SUNonline/Orillia said more than once it was unlikely anyone would invest millions of dollars here for a backup center and this would be the main operational control point for the electrical grid in Ontario.
“That’s correct,” Hydro One president, Mark Poweska confirming Barrie’s control center will become the back up to Orillia’s.
The other question is only a year old, stemming from the announcement Hydro One would start building the control Center in the West Ridge right away – before a decision was reached by the Ontario Energy Board on the sale proposal which included the commitment to build the control center, a regional operations centre and a warehouse in Orillia.
We previously wondered why Hydro One was committing before the OEB decision when all previous communication from them indicated they would not build in an area they did not control. Was it a ploy to get the OEB to rule in favour? Or was management confident the board was going to rule in favour?
“That decision was independent of the OEB decision to facilitate this acquisition,” said Poweska. “We recognize that the location Orillia and the location of a good control center, relative to our backup control center, is the ideal location and access in and out of the community is ideal, so the decision on that was independent.”
“It is preferable we locate in a location where we have service, but it wasn’t a strategic move from a perspective of trying to move this deal forward. We recognize it is the right location and we have really good support by the mayor and council and others in this community and we learned that during the acquisition process.”
The construction of the control center on University Avenue is well underway and is expected to be ready for use in the fall of 2021. A construction timeline for the other two buildings has not been established.
“We’re in the planning phases of both the provincial warehouse and the regional operations center, scoping out that, location, size and things like that. I’m not sure of the in-service date for that yet,” said Poweska. “We’re very much active on the planning side of that.”
The operations center will serve as the central office for engineering for design of new lines and upgrades. It will also be home to management planning maintenance and trouble responses.
When the facilities are open, existing staff will transfer to Orillia, but Poweska said there will be opportunities for people here to find work with Hydro One.
“A bunch of those employees will be relocated from somewhere else to the control center here, but as there is turn over and things like that, we do expect to see more and local community members getting employment there.”
He also said Orillia Power employees are guaranteed one year in their current positions and they will then be able to transfer to other Hydro One areas, or to advance through the ranks.
Mayor Clarke told SUNonline/Orillia the City has received $36 million. This included $9.86 million plus interest the City loaned OPC at the start of its life as a separate entity in the early 2000s and a $3.583 dividend in the form of 6 properties. Previously the City received an annual cash dividend and the properties involved are not needed by Hydro One. The West Street head office of the OPC, valued at $2.4 million is included in the transaction and there is 5 year lease by Hydro One.
While the sale is closed, the books are not. The City will be getting another cheque.
“There will be some closing adjustments. Out of the closing adjustments will come the legal things we’ve accumulated,” Clarke told SUNonline/Orillia. “There will probably be a little bit of a top up from the closing adjustments.”
And it is expected there will be other development occurring as spin off from Hydro One’s establishment here in Orillia.
“The short answer is yes,” Clarke said. “The economic department is getting a lot of inquiries across the board, but some of them have been related to Hydro One deciding to locate here.” He said there already has been a case for investment in Orillia by another company because of Hydro One.
“Bell decided to leap frog a lot of other communities and install fiber throughout the city, so we have internet technology and speed that most other communities in Canada don’t have That was a result of Bell recognizing what Hydro One’s bringing here.”
What Does It Mean Now
You monthly bill will be slightly lower. It’s worth noting, Orillia rates have been stagnant for 5 years already while the rest of the province has seen rate increases. Starting yesterday a residential account using 750 kWh will be .23¢ lower – and it will stay that way for the next 5 years. Commercial accounts will get the same treatment. Beyond 5 years rate increases may occur, but according to sale conditions will be less than the rate of inflation.
Eleven years from now Hydro One will get to apply for increases in a normal fashion, which typically are between 10 and 15% every 5 years – but that will apply to the rate in effect in year ten – the OEB was clear, there will be no catch up. Orillians will likely enjoy lower electricity bills than the rest of the province for a very long time.
“It really is something to celebrate. Orillians will continue to get reliable electricity service at a reduced distribution rate and the investment Hydro One is going to make are going to have economic benefits for decades to come,” Clarke said.
For a while, Orillia Power Corporation will continue to exist because it is the parent to Orillia Power Generation Corporation, but the name is going to change in the near future to Genco. The City of Orillia will continue to own all the shares of the OPC and the generating stations.
For the next year bills will still come from the OPC, and you can still contact them at 705-326-7315 or by email info@orilliapower.ca. In fact, you’ll still see OPC service trucks and staff until next year when the integration of systems is completed.
(Photos by Swartz – SUNonline/Orillia) Main: Hydro One’s Jason Fitzsimmons and Mark Poweska, along with Orillia Mayor Steve Clarke mark the official closing of the sale Wednesday of Orillia Power Distribution at the OPC offices on West Street.