OEB pulls plug on Hydro One Orillia Power Distribution deal
Not satisfied no harm assessment test requirement had been met.
TORONTO — The Ontario Energy Board has rejected Hydro One’s application to purchase the Orillia Power Distribution Corp.
Hydro One had announced a deal to acquire the utility company for $41.3 million in 2016. The figure included the assumption of about $14.9 in OPDC debt.
In its decision, the OEB said it applied a “no harm test” to assess the deal and was not satisfied that the test requirement had been met.
Hydro One had said the deal would result in a one per cent reduction in base delivery rates for Orillia Power’s customers in years 1 to 5 and rate increases of less than the inflation rate in years 6 to 10.
The utility also said the consolidation would result in ongoing cost savings of approximately $3.9 million per year and reduced capital costs of about $600,000 per year.
The OEB said, however, that while it agreed that the deal would “reasonably be expected to result in overall cost savings and operational efficiencies,” they might not necessarily translate to lower rates for customers in the long run.
Both Hydro One and the City of Orillia said they are reviewing the decision before determining their options.
Negotiations between the city and Hydro One began in September 2015 and the deal was finalized the following August.