TORONTO—Ontario utility Hydro One Ltd., which was partially-privatized in a controversial initial public offering last year, has announced it has reached an agreement with the central Ontario city of Orillia to buy the city’s public power distribution company.
Hydro One will pay $26.35 million for 100 per cent of Orillia Power Distribution Corp., as well as $14.9 million to cover debt and regulatory liabilities, bringing the total value of the deal to $41.35 million.
“This merger of two long time neighbours makes perfect sense and we believe will enable us to realize operational synergies over time that can positively impact electricity prices and quality of service,” Mayo Schmidt, the utility’s president and CEO, said. “At the same time, we look forward to partnering with the City of Orillia in investing in facilities that will bring long-term economic value to City of Orillia businesses and residents”.
Orillia Power serves about 14,000 customers and has a rate base of $28.2 million in Simcoe County.
Meanwhile, Hydro One and the city have reached separate facilities and land purchase deals that will see the company build a backup Ontario grid control centre, warehouse and regional operations centre in Orillia—so long as the Orillia Power agreement reaches closing. The utility did not release the value of the proposed investments.
Following its IPO last fall, Hydro One also spent $373 million to buy Great Lakes Power Transmission LP from Brookfield Infrastructure, further bolstering its control of Ontario’s power transmission and distribution business.
The deal for Orillia Power will be subject to customary approvals, including the approval of the Ontario Energy Board (OEB).