The corporations behind Waterloo Region-based utilities Kitchener-Wilmot Hydro and Waterloo North Hydro announced plans on Friday to merge.
In a news release, the two companies said plans to combine operations come after thorough discussions and in-depth analysis.
“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,” said David Petras, chair of Waterloo North Hydro Holding Corp.
“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.”
The merge still needs approval from the five municipal councils which are affected: the cities of Waterloo and Kitchener, and the townships of Woolwich, Wellesley and Wilmot. It would then need to be approved by the Ontario Energy Board.
Combining the two utilities would create the seventh-largest utility in Ontario by the number of customers.
“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 companies stated in the news release.
“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 companies also said the merger will help distribution rates remain “competitive and stable” for customers. They claim that distribution rates for all customers are projected to increase at less than the rate of inflation over the 10 years following the merger.
Municipalities are also expected to receive an increase in incremental dividends and interest on their investment over the 10-year period following the merger.
Each municipality would also receive proportional ownership in the new company and representations on a new board of directors.
Layoffs are not expected either 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,” the companies said.
The proposed merger will be presented to all five municipal councils for approval next week.
That will be followed by engagement with the community and employees, including public information sessions. A new website has also been launched.
The five municipalities are then expected to make a decision on the merger in December.
If approved by all municipal councils, the merger applications will then be submitted to the Ontario Energy Board for regulatory approval, which is expected in the third quarter of 2022.
The new company would begin operations soon after.
“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,” said Jim Phillips, chair of Kitchener Power Corp.
“And when it comes to employees, this local merger will keep jobs here in our community.”