To Mulock Drive for a presentation on Newmarket Hydro from Grant Thornton (GT) who are offering “strategic advice” on whether to (a) sell or (b) retain the hydro company in municipal ownership. There was also talk about the pluses and minuses of merging with another hydro outfit.

The Town owns 93% of Newmarket Tay Power with the municipality of Tay holding the remaining 7% stake. The Mayor tells us the review is all part of “due diligence”.

The presentation from Troy MacDonald is upbeat in a Bay Street kind of way. The utility has a “strong conservative balance sheet” and outperforms comparators. Service levels are better (fewer outages) and rates for residential customers are “significantly below” the industry average. Commercial and industrial rates are “slightly above”.

Backslapping

There is much self congratulatory back slapping.

Tom Vegh wants to know why our hydro company is so good.

Dave Kerwin, always lavish with praise, lays it on with a trowel. He points to the outstanding helmsman, Chief Executive, Paul Ferguson, who orders trees to be pruned back if there is any danger they may interfere with hydro lines. Such foresight is entirely missing in, say, Toronto.

The Mayor (who, depending on your point of view, either accepts or refuses $10,000 a year for sitting on the hydro board) wants to hear about the MAAD rules which, apparently, have something to do with mergers.  

MacDonald tells us we should “actively monitor and explore merger activity to seek opportunities to build greater scale and be positioned for consolidation”. No surprises there from someone who, presumably, makes a mountain of money from advising on mergers.

Seller’s Remorse

John Taylor astutely asks if work has been done on the consequences of mergers within the industry say over a ten year period. What is the risk? Is there ever “seller’s remorse”?

We are told it is important to get to a scale that protects from risk. But MacDonald can’t point to the studies that Taylor is after. I am sure they exist.

Christina Bisanz wants to know who we would merge with if we were so inclined. What would they bring to the party?

An inquisitive Joe Sponga wants to know what the right size is for a hydro company. He talks about Aurora selling out to Powerstream, before memorably adding: “the bigger the fish, the bigger the predator”. MacDonald’s answer is conveniently elastic. You are too big if you can’t do things in your local community you would otherwise have done.   

He makes one thing crystal clear. An outright sale would not make sense.

Spookily, I find myself thinking about Darryl Wolk.

Time to move on.

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