Merger Proposal

Mergers, Acquisitions, Amalgamations and Divestitures Application (“MAADs”)



On April 15, 2016, the proposal to merge Enersource, Horizon Utilities and PowerStream was submitted to the Ontario Energy Board. Shareholders for the utilities are looking to merge and subsequently purchase the assets of Hydro One Brampton from the Ontario government.

The regulatory approval application – known as MAADs (Mergers, Acquisitions, Amalgamations and Divestitures) – was submitted by Enersource, Horizon Utilities and PowerStream. It is anticipated that the approval process will take approximately six months.

Should the transaction be approved, Enersource, Horizon Utilities, Hydro One Brampton and PowerStream would consolidate to become the second largest municipally-owned electricity distribution company in North America (based on number of customers), serving close to one million customers in the Greater Golden Horseshoe Area, with a service territory of 1,800 square kilometres.

Subject to regulatory approval, the transaction will enable a new, larger company to use its collective resources to reduce upward pressure on distribution rates. It will also deliver more efficient services and innovative technologies for customers, while providing significant benefits for communities and shareholders. There will be no single controlling interest among the shareholders, ensuring that all local interests continue to be served.

The submission of the MAADs application follows a signing ceremony held on March 24, 2016, at which time all seven shareholders signaled the end of negotiations by signing legal agreements associated with the transaction. The legal agreements milestone was attended by the Hon. Bob Chiarelli, Ontario’s Energy Minister, mayors for the municipal shareholder communities, and a representative for the Enersource shareholder Borealis.

What is Being Considered?

A proposal has been developed to bring together four of Ontario’s most successful local electricity distribution companies: Enersource, Horizon Utilities, Hydro One Brampton and PowerStream.

The purpose of this new partnership would be to use its collective resources – serving almost one million customers in Peel Region, York Region, Barrie/Simcoe County, Hamilton and St. Catharines – to continue delivering reasonable distribution rates, efficient services and innovative technologies for its customers.

As a merged company, we believe we can continue to gain additional efficiencies through achieving greater economies of scale as well as spreading the cost of administration and other back office operating costs over a larger base of customers and electricity distribution.

We believe the proposed merger will be beneficial for the customer, the community and the shareholders.
The plan being considered will require the approval of all shareholders and will be subject to regulatory approvals, including the Ontario Energy Board (OEB).

The City of Mississauga is expected to vote on the merger this September after reviewing the benefits for customers and the community. The OEB will subsequently review the deal pending the outcome of all local council votes.

Our proposal keeps the ownership of the new company publicly owned by the municipalities of Mississauga, Barrie, Markham, Vaughan, Hamilton, St. Catharines, as well as BPC Energy Corporation (Borealis) which is part of the Ontario Municipal Employees Retirement System, the pension fund for Ontario’s municipal employees. The new company would purchase Hydro One Brampton.

Time is Right for Merging

The time is right to merge for two main reasons.

First, the Ontario Government recently created a new set of policies to foster a business environment where consolidation of local utilities is more attractive. As well, the Ontario Energy Board now allows merging utilities to maintain the financial gains they earn through efficiencies for several years longer than was the case before.

In other words, the policy framework is purposefully starting a wave of utility consolidation across the province. We plan to be ahead of that wave by taking a leadership position.

Second, Enersource works to ensure excellence in all that we do. Merging with other leading utilities to create a larger, more efficient company would allow us to continue to drive efficiencies for the benefit of our customers and municipal shareholders.

Our Responsibility to Customers and Municipal Shareholders

Enersource has a responsibility to address all long-term market conditions in order to deliver safe, reliable electricity to our customers at the lowest-possible price. We must accomplish all of this while providing sustainable dividends to our shareholders.

Benefits to Customers

Enersource works to keep our distribution rates as low as possible while ensuring our customers are provided with safe, reliable electricity services.

As a merged company, we believe we can continue to gain additional efficiencies through achieving greater economies of scale as well as spreading the cost of administration and other back office operating costs over a larger base of customers and electricity distribution.

Giving consideration to joining together with other electricity distributors who are very much like ourselves – municipally-focused and operating in the Greater Golden Horseshoe – allows us to achieve further growth and the efficiencies that come with it.

Benefits to Shareholders

Enersource’s major shareholder is the City of Mississauga; Borealis owns 10 per cent. If the business rationale for joining together has merit and the proposal goes ahead:

  • Our shareholders would continue to receive sustainable income from regular dividends for years to come.
  • The value of the public utility would be enhanced by its size, attractive markets served, and the ability to earn stable returns.
  • Our shareholders would retain a say in a larger company that would have no majority or controlling shareholder.

In other words, our shareholders would own a more valuable asset.

Cost of the Status Quo

The merger being considered would help to reduce the upward pressure on future distribution rate increases for our customers and increase our shareholders’ income from dividends over the long term.

The status quo – not joining together with the others – would make it difficult to sustain Enersouce’s past strong performance. The electricity industry is changing considerably. Maintaining the status quo could result in Enersource not having the size or resources to take advantage of opportunities that would sustain the company’s level of profitability and reasonable customer distribution rates.

Enersource, therefore, believes that the partnership being considered is in the best interests of our shareholders and customers.

Frequently Asked Questions


How will the new business be governed?

A Board of Directors, based on proportional representation of all shareholders will provide governance and oversight of the new company.

Who is required to approve this proposal?

The proposal being considered requires the approval of all shareholders including the City of Mississauga. Enersource, in conjunction with Horizon and PowerStream, is currently developing the proposal which will demonstrate value to customers by reducing upward pressure on customer distribution rates as well as provide benefits to shareholders. Once this is complete, each shareholder Council will be in a position to deliberate on the merits of the proposal.

Any merger or acquisition of utilities requires Ontario Energy Board approval. The Ontario Energy Board follows a formal process for review and approval. It also has prescribed rules for ensuring that efficiency savings are passed on to customers in the form of lowering the impact on future rates.

Is the business being sold or will the municipality continue to own it?

The transaction being considered is a merger of Enersource with other municipal electric utilities, plus the purchase of Hydro One Brampton. The new company will continue to be owned by the municipalities of Mississauga, Barrie, Hamilton, Markham, St. Catharines and Vaughan, as well as Borealis, which is part of the Ontario Municipal Employees Retirement System (OMERS).

Does the proposed merger have anything to do with the partial sale of Hydro One?

The proposed merger is a separate initiative from the Ontario Government’s partial sale of Hydro One Networks, the provincially-owned utility. Hydro One Brampton is a separate and distinct company from Hydro One Networks. It is the former Brampton municipal utility and, like Enersource, has been run with a municipal focus.

Customer Impact:

Will Enersource’s customers be given an opportunity to comment on the merger?

When the merger proposal is before Council for consideration, the City of Mississauga’s standard practice allows for members of the public to make a request for deputations at General Committee and/or Council meetings.

The proposal will also require Ontario Energy Board approval. The Ontario Energy Board has a formal process for review and approval that also includes public input.

Is this going to affect how customers pay their bill?

Customers will continue to pay their electricity bill in the same manner they always have.

Will the bill increase if distribution rates are higher in one service territory than the others?

There are some differences in distribution rates among the service territories of the four utilities, but for the most part, these are very small differences. Significant synergies exist that are expected to have a favourable impact on future customer distribution rates. Any change in rates would occur only through the approval of the Ontario Energy Board.

Will service be affected under a single, large company?

Each utility will continue to have its own local operations maintained and its unique requirements recognized. The new merged company will be dedicated to maintaining or improving service reliability and customer service in the future.

Operational Impact:

Where is my emergency electricity service coming from? Will I have to wait for an emergency crew to come from another service territory? How long is that going to take?

Emergency response times will not change. Maintaining or improving the level of service will continue to be necessary in the new merged company.

The new merged utility will be committed to maintaining and enhancing customer service in all of its locations.

Where will the service centres be located?

The existing service centre locations will remain the same.

Are you merging in order to make more profit?

The utilities are considering joining together because it is in the best interest of all their customers and shareholders.

Even though utilities, including Enersource, are responsible for only approximately 20 to 25 per cent of a customer’s total bill, a combined entity can achieve additional efficiencies and help to keep future distribution rates lower.

Is this essential for Enersource? Why do you have to join with other utilities?

Enersource, Horizon Utilities, Hydro One Brampton and PowerStream are four of the leading and most well-established electricity distribution companies in Ontario. All are innovative, forward thinking and community-focused. By combining knowledge bases, resources and leveraging their size as a larger company, we will be in a better position to implement emerging technologies to provide new and enhanced services to customers.

Also, as leading companies, we recognize that further efficiencies must be achieved in order to reduce the upward pressure on local electricity distribution rates paid by our respective customers.  By giving consideration to joining together with other utilities, further efficiencies can be achieved through eliminating the duplication of services and realizing economies of scale.


Key Reports and Documents