City of Belleville Approves Merger of Veridian Corporation and Whitby Hydro Energy Corporation
Posted: June 26, 2018
BELLEVILLE – The City of Belleville Council voted in favour of a merger between Veridian Corporation (“Veridian”) and Whitby Hydro Energy Corporation (“Whitby Hydro”) during a meeting last night. The City of Belleville is one of five municipal shareholders who need to approve the merger so that it can move forward through the regulatory process.
Council’s decision follows a comprehensive merger analysis process with advice from multiple industry experts, including third-party peer reviews and valuations completed on behalf of municipal shareholders. The new combined company will continue to be 100 per cent municipally-owned and The City of Belleville will have nine per cent ownership interest in the merged company.
“City Council is happy to announce our support for the Veridian-Whitby Hydro merger as we believe it will benefit our residents and businesses for years to come,” says Mayor Taso Christopher. “Our municipality expects to receive higher annual dividends that can be reinvested into our existing Dr. Recruitment program or other programs as determined by Council.”
Customers will benefit from the greater rate stability a merger offers, along with protection from potential future rate increases. Increases to distribution rates are expected to be, on average, approximately 3.8% less than they otherwise would have been under Veridian and Whitby Hydro alone. Customers can also expect access to greater resources during major outage events, around the clock control room capabilities across the entire service area, and better overall customer experience as the merged company leverages the best practices of both utilities.
The merger offers shareholders stronger, more sustainable cash flow in interest and dividends and is expected to produce about $90 million in savings over the next 17 years. Municipal shareholders will receive increased dividends, which will offset tax increases and can be reinvested in local communities.
“We are pleased the City of Belleville shares our belief that a merger between Veridian and Whitby Hydro will be a win-win for our customers and shareholders. Combining our utilities is our best opportunity to mitigate against future rate increases as it allows us to achieve greater economies of scale, find efficiencies, and develop our competitive strengths,” said Adrian Foster, Chair of Veridian’s Board of Directors.
Veridian and Whitby Hydro entered into a Memorandum of Understanding related to the merger on July 17, 2017 and their respective Boards of Directors approved the transaction and recommended it to their respective shareholders in January 2018. Pending approval by all municipal shareholders and execution of the merger participation agreement, an application will be submitted to the Ontario Energy Board (OEB) for regulatory approval. The OEB process reviews many aspects of the merger, including a “No Harm Test”, that ensures the proposed merger does not have an adverse effect on ratepayers. The merger would take place following OEB approval, assuming normal legal conditions set out in the agreement have been met.
“This is an exciting opportunity. The energy market is changing, and we must grow and innovate for long-term sustainability and to deliver greater value to our customers and shareholders. Together, our combined company will be better positioned to meet the changing needs of our customers while continuing to offer the reliability and services expected from both of our utilities,” said Patrick McNeil, Chair of Whitby Hydro’s Board of Directors.
Veridian and Whitby Hydro collectively employ about 300 people throughout the region. Approximately 35 positions are expected to be eliminated over time, primarily through normal attrition and retirement, and there will be new business opportunities created within the new organization. Additionally, both head office locations are expected to be retained for the foreseeable future, continuing presence and local jobs across the service area, and all shareholders will continue to hold a seat on the new company’s Board of Directors.
The new, yet-unnamed, combined energy company would service more than 162,000 residential and business customers and be the fourth largest municipally-owned electric utility in Ontario. More information on the proposed merger is available online at: http://learnmore.veridian.on.ca/ and http://learnmore.whitbyhydro.on.ca.
About The City of Belleville
The City of Belleville, located in Eastern Ontario, is a progressive community of more than 50,000 people but is the centre of the Bay of Quinte Region which has a population of more than 200,000. With its economy securely rooted in industry, Belleville has become the premiere destination for those looking to enjoy big city amenities with small town charm. Please visit: BELLEVILLE.CA
About Veridian Corporation
Veridian Corporation owns and operates Veridian Connections, a subsidiary company that distributes electricity, generates power and provides energy services to more than 121,000 customers. The City of Pickering, the Town of Ajax, the Municipality of Clarington and the City of Belleville jointly own Veridian Corporation. Please visit: http://learnmore.veridian.on.ca/
About Whitby Hydro Energy Corporation
Whitby Hydro Energy Corporation is a holding company owned by The Town of Whitby. Contained within are two separate and distinct subsidiaries - Whitby Hydro Electric Corporation and Whitby Hydro Energy Services. Whitby Hydro Electric Corporation is an electricity distributor licensed by the Ontario Energy Board to deliver electricity to homes and businesses in our service area of the Whitby, Brooklin and Ashburn communities. Whitby Hydro serves more than 41,500 customers. Please visit: http://learnmore.whitbyhydro.on.ca/
City of Belleville
Via Marilyn Warren
613-967-3200, ext. 3263
President and CEO
Via Chris Mace
905-427-9870, ext. 2218
President and CEO
Via Mike Chase
905-668-5878, ext. 235