Mississauga to buy back 10 per cent of utility

MISSISSAUGA, ONTARIO - Mississauga council has voted to spend tens of millions of dollars to buy back a minority shareholder's 10 per cent stake of its hydro utility, Enersource.

The 7 to 4 vote followed a heated debate of several hours that reopened old wounds and had long-hidden secrets about the utility's history tumbling out on the council floor.

Questions were asked by several angry councillors about a controversial agreement made in 2000, when the city's then CAO, Dave O'Brien, signed a secret deal with Borealis Infrastructure, the second shareholder. (O'Brien is now with Toronto Hydro.)

The final agreement included clauses different from those approved by council. That caused a host of problems because it gave Borealis a veto on a wide range of issues, including the first right of refusal on any future sale.

If Mississauga tried to sell Enersource to another public utility – and thereby enjoy a provincial tax holiday – the sale price could be vetoed and matched by Borealis. If Mississauga were forced to sell to Borealis, a private body, the city would face a huge tax penalty.

"We own 90 per cent; they own 100 per cent veto power," Councillor Carolyn Parrish said of the deal. "This has got to end."

A heated battle ensued between supporters of Parrish, who advocated using reserve funds to buy out Borealis, and those backing Mayor Hazel McCallion, who tried to postpone a decision until a public meeting could be held.

Borealis's stake in the company first appeared on the public radar a year and a half ago, when it vetoed council-ordered cuts to the salaries of board members.

That led to an investigation that revealed the company's veto power, of which several councillors had been unaware. Previously, much of the Enersource debate had taken place behind closed doors.

Details emerged – including a possible buyout price ranging from $25 million to $40 million.

Mississauga's reserves, while dwindling, include about $207 million left from the original $340 million the city pocketed when Mississauga Hydro was deregulated and recapitalized.