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Ontario regulator approves 3-way utility merger

The Ontario Energy Board approved the proposed combination of three electric distribution utilities and their subsequent acquisition of a fourth utility to create the second-largest municipally owned electric utility.

The board, known as the OEB, issued a decision and order Dec. 8 allowing for the combination of Enersource Corp., Horizon Utilities Corp. and PowerStream Inc. Once amalgamated, the new entity will acquire for C$607 million and absorb Hydro One Brampton Networks Inc., now owned by the provincial government through electricity transmitter Hydro One Inc.

Combining the utilities was first proposed in April as a way to provide better customer service and a broader range of products, as well as to increase value for the municipalities that currently own the utilities. In July, they announced a leadership structure for the combined entity. Altogether, the four companies serve about 960,000 customers.

"[C]ustomers will not be harmed by the proposed transaction in the short term," the OEB said, "and will, in fact, be better off and will likely benefit from the enduring benefits of scale in the long term."

The board accepted the utilities' evidence that over 10 years, the four companies' combined distribution revenues decline 3.3% a year compared to the status quo for a 10-year total of C$195 million. Overall savings during the first 10 years after the combination's completion were estimated at C$426 million.

Enersource is owned by the city of Missisauga; Horizon Utilities is owned by the cities of Hamilton and St. Catharines; and PowerStream is owned by the cities of Barrie, Markham and Vaughan. Hydro One Brampton is owned by the city of Brampton. (OEB Docket Nos. EB-2016-0025, EB-2016-0360)