TORONTO — Ontario’s premier suggests a rejection by the province’s energy regulator for Hydro One‘s application to purchase the Orillia Power Distribution Corp. is a win for consumers that demonstrates the system is working.
Hydro One had announced a deal to acquire the utility company for $41.3 million in 2016. The figure included the assumption of about $14.9 million in OPDC debt.
In its decision, the OEB said it applied a “no harm test” to assess the deal and was not satisfied that the test requirement had been met.
Hydro One had said the deal would result in a one per cent reduction in base delivery rates for Orillia Power’s customers in years one to five and rate increases of less than the inflation rate in years six to 10.
The utility also said the consolidation would result in ongoing cost savings of approximately $3.9 million per year and reduced capital costs of about $600,000 per year.
The OEB said, however, that while it agreed that the deal would “reasonably be expected to result in overall cost savings and operational efficiencies,” they might not necessarily translate to lower rates for customers in the long run.
Premier Kathleen Wynne said Friday that the decision shows how Ontario ratepayers are protected.
“The OEB deemed that the Hydro One proposal was not going to save ratepayers any money and so it wouldn’t go forward,” she said.
I think that demonstrates that the system works, that the Ontario Energy Board has a responsibility to make sure that decisions that are made are in the best interests of the people of the province. … I think that should give people confidence about the way the system works.“
Wynne’s comments come a day after Ford said his first act as premier would be to fire CEO Mayo Schmidt and board of directors of the partially privatized utility.
The newly minted Progressive Conservative leader said he would dump Schmidt because he presided over the dramatic increase of rates and earned a $6.2 million salary.
Both Hydro One and the City of Orillia said late Thursday that they are reviewing the decision before determining their options.
Negotiations between the city and Hydro One began in September 2015 and the deal was finalized the following August.