City of Vaughan approves PowerStream merger

Ontario Utilities Merger will combine PowerStream, Enersource, Horizon Utilities, and Hydro One Brampton, lowering distribution rates, boosting dividends, and awaiting municipal approvals and Ontario Energy Board review to serve the Greater Golden Horseshoe.

At a recent special council meeting, the City of Vaughan approved a transaction that if completed will see PowerStream Holdings Inc. merge with two utilities, Enersource Corporation and Horizon Utilities Corporation, and jointly purchase the shares of Hydro One Brampton Networks Inc.

The proposed four-utility merger still requires the approval of one other PowerStream shareholder municipality Markham as well as the municipal shareholders of Horizon Utilities Hamilton and St. Catharines before it can proceed. PowerStream’s other shareholder municipality Barrie recently approved the transaction and the municipal shareholder for Enersource Mississauga gave its approval in the first week of October.

The City of Vaughan recognizes the proposed merger would result in significant benefits for residents:

- Reduced upward pressure on customer distribution rates

The merger is expected to reduce the upward pressure on distribution rates through reduced costs over 25 years, which is projected to save customers, on average, $40 annually.

- Improved financial returns to shareholders

Steady and growing dividend stream at a higher level than the current arrangement. Dividends for the City of Vaughan are expected to increase in the first 10 years post-transaction by a total of $62 million.

- Stronger platform for growth in the future

The larger utility will have a bigger geographic footprint and provide more diversification and greater capital resources, and opportunities to finance expansion, as seen in acquisitions such as Haldimand County Utilities elsewhere in Ontario.

- Better position to provide input on government policy

Merged utility will be in a key position of leadership and will be better able to provide input on government and regulatory energy policy and to coordinate restoration after damaging storms in Ontario for the benefit of customers and shareholders.

If the merger is fully approved, all municipal shareholders would have proportional representation on the company’s board of directors. There would be no single controlling interest in a new, larger utility. Should the proposal be approved by all shareholders, it will proceed to the Ontario Energy Board for final review and approval.

The proposed merged company would provide service to more than 900,000 customers in the Greater Golden Horseshoe Area including York Region, Simcoe County, Peel Region, Hamilton and St. Catharines. Based on the number of customers served, the merged company would be the second largest electric utility in Ontario and fifth largest in Canada.

“This is an exciting time for PowerStream and for the City of Vaughan. This proposed merger is the right deal at the right time. It will provide savings to customers and increase revenues for shareholders. It puts the company in a great position for the future. As Chair of PowerStream, I would like to thank everyone who has been involved in this process. This merger will further enhance our ability to deliver reliable power safely and efficiently, and better serve our customers," said Vaughan's Mayor Maurizio Bevilacqua, who is also the Chair of PowerStream's Board of Directors. POWERSTREAM

PowerStream is a product of several mergers and acquisitions that have seen the utility achieve synergies, which have enabled the company to provide its customers with distribution rates that are among the lowest in Ontario and earn greater dividends for its municipal shareholders.

PowerStream was created in 2004 as a result of the merger of Hydro Vaughan, Markham Hydro and Richmond Hill Hydro. In 2005, the utility purchased the assets of Aurora Hydro Connections from the Town of Aurora and then merged in 2009 with Barrie Hydro. In 2012, PowerStream formed a strategic partnership with the Town of Collingwood in the ownership and operation of Collus PowerStream.

ABOUT THE LOCAL DISTRIBUTION COMPANIES PowerStream

PowerStream Holdings Inc. is a municipally owned energy company providing power and related services to more than 375,000 customers primarily residing or owning a business in communities located immediately north of Toronto and in Central Ontario, amid sector changes like Hydro One's acquisition of Norfolk Power Inc. in the region. It is jointly owned by the Cities of Barrie, Markham and Vaughan through their respective holding companies, Barrie Hydro Holdings Inc., Markham Enterprises Corporation and Vaughan Holdings Inc.

Enersource

Enersource Corporation serves over 200,000 residential and commercial customers across Mississauga. It is a diversified energy and technologies company that serves customers through the distribution of electricity and the delivery of services related to the design, operation and maintenance of electrical systems. Ninety per cent of Enersource Corporation is owned by the City of Mississauga, which moved to buy back 10 per cent from BPC Energy Corporation Borealis, which is part of the Ontario Municipal Employees Retirement System OMERS.

Horizon Utilities

Horizon Utilities Corporation provides electricity and related utility services to over 240,000 customers in Hamilton and St. Catharines. Horizon Utilities is wholly owned by Horizon Holdings Inc., a company jointly owned by the cities of Hamilton and St. Catharines through their holding companies Hamilton Utilities Corporation and St. Catharines Hydro Inc.

Hydro One Brampton

Hydro One Brampton Networks Inc. was acquired by Hydro One from the City of Brampton in 2001, following the sale of Brampton Hydro process and it has more than 150,000 residential, commercial and industrial customers and serves an area of 300 square kilometers. In order to meet the growth of the community and needs of its customers, Hydro One Brampton continues to work with the City of Brampton and other organizations to improve Brampton’s infrastructure and distribution system.

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