Hydro One has withdrawn from negotiations regarding the sale of Peterborough Distribution Inc.
John Stephenson, president and chief executive officer of Peterborough Utilities Group, says Hydro One walked away from talks this week.
Hydro One approached the city in 2004 about a purchase of the publicly-owned utility with an agreed price tag of $105 million after city council voted 6-5 in favour of the sale in Dec. 2016.
“I’m disappointed – I believe whatever gaps remained between the parties were surmountable,” Stephenson told CHEX News.
“And they could have been resolved with the parties continuing in good faith in negotiations.
Hydro One’s letter of intent included a competitive price, job and benefit guarantees for existing PDI workers, distribution rate and other rate protections for customers and commitments for new jobs and new investments such as building a new regional Hydro One operations centre in Peterborough.
Negotiations have been ongoing for more than two years.
Mayor Daryl Bennett said he was disappointed that “Hydro One walked away from its offer to the city.”
“It was almost an unprecedented offer in terms of price, a 10-year rate guarantee for customers, protections for PDI employees, new jobs and the construction of a regional Hydro One operations centre in Peterborough,” said Bennett.
“I expect city staff will report back to council on the negotiations.”
In a statement, Hydro One said “both parties were unable to reach a final agreement.”
“The role of both parties in these commercial negotiations is to ensure that the end result is an outcome that creates customer and shareholder value,” the statement reads.
“In this particular case, despite the strong offer made to the City of Peterborough, the two parties were unable to achieve that balance.
“Hydro One would like to thank Mayor (Daryl) Bennett, the City of Peterborough and members of both negotiating teams and looks forward to continuing its relationship as long-time neighbours and proud members of the Peterborough community.”
Peterborough CAO Allan Seabrooke says he was surprised and disappointed by Hydro One’s decision. PDI serves Peterborough, Lakefield and Norwood.
“They saw things differently,” he said. “I believe it’s finished. It’s highly unlikely it will be revived.”
Stephenson wouldn’t elaborate on the stumbling blocks in talks but said it wasn’t over the price.
“Clearly the parties weren’t able to come together but there were differences that needed to be resolved. But I didn’t think they couldn’t be resolved. But there are a lot of elements to a transaction like this that need to be addressed and obviously those all have to be synced up to the agreement of both parties and that what takes to make a transaction complete and we obviously couldn’t get there.”
Stephenson and Seabrooke say it will be business as usual for PDI.
“What happens going forward I think is really a discussion that ultimately that will be back in the hands of city council in the future,” he said. “I don’t think there will be any urgency. We will continue to be a best-class organization.”
“No level of service changes will occur; status quo will exist,” added Seabrooke. “We aren’t at all concerned with the level of service. No one will see any changes moving forward in the short-term.”
A joint release from the city and PUG noted PDI remains a valuable asset in a “rapidly changing industry.”
“In recent years, the province has stated that well capitalized, larger distribution companies will be needed to achieve efficiency gains and cost reduction,” the release states. “Smaller distributors have been strongly encouraged to voluntarily sell or merge to reduce the number of electricity distributors in the province. “Communities across Ontario have already made decisions or are continuing to explore various ownership options for their electricity distribution companies to respond to the dramatic ongoing changes in the sector.
“PDI executives continue to monitor the pressures and changes affecting the electricity distribution sector on behalf of its sole shareholder, the Corporation of the City of Peterborough. ”
The approved sale of PDI was met with backlash by many residents. A poll by the Canadian Union of Public Employees found 90 per cent were against the sale of PDI.
Town Ward councillor Diane Therrien was one of five councillors opposed to the sale, and noted the public’s opposition to the deal in a statement released Friday.
“But despite the public’s opposition and with promises of a deal that seemed too good to be true, six members of council voted to sell PDI,” Therrien stated. “This deal has cost us thousands of dollars and irreparable damage to our relationship with the citizens of this community who did not want the city to sell their public utilities. And we now find out the deal has fallen through.”
“We deserve to know that happened. We deserve answers.”