Collingwood Council has agreed to sell its 50 percent stake in Collus PowerStream, the local distribution company, owned by the Town of Collingwood and Alectra (formerly PowerStream).
Through the competitive RFP process, it was made evident that owning just 50 percent of the utility was not appealing for any potential purchasers, and significantly limited the municipality's options to divest itself of the remaining shares. In January of 2017, Council announced that it was pursuing hydro share sale discussions with EPCOR.
The Unanimous Shareholders Agreement (USA) entered into by the Town and Alectra in 2012 contains an exit provision, which requires the Town to present a buy/sell option to Alectra for the sale of the Town's shares.
If Alectra opts to buy the Town's shares at the same price as EPCOR has offered, Alectra will become the sole owner of the utility. If Alectra opts to sell its shares, EPCOR will become the sole owner of the utility.
Under the USA, Alectra must advise the Town within 20 days whether they wish to sell their shares, or purchase the Townâ€™s shares. After a decision is made, the parties must make an application to the Ontario Energy Board to approve the transaction. This process could take anywhere from three months up to one year.
In both options presented, the Town would receive between $12.5M and $13M from the sale of their 50 percent shares. In 2012, the Town received $8M for 50 percent of its Collus PowerStream shares. The municipality is confident that the purchase price and terms established by the Town maximizes the value of the shares, and is in the best interests of Collingwood, its taxpayers and ratepayers. Staff will provide Council with a report on potential investments for these funds in the near future.
The Town will hold a Public Information Session to provide further details of the agreement, once Alectra's decision is known. Residents are assured that Collus PowerStream's electricity distribution rates are set, and will continue to be set by the Ontario Energy Board (OEB).
Other terms of the sale include a 25-year lease of the Collus PowerStream property and operations centre from the Town, job and location guarantees for Collus PowerStream employees, and a contribution of $150,000 towards the Waterfront Master Plan, one of the community's biggest priorities, as identified in the Community Based Strategic Plan.
To view the full presentation given at the Special Council meeting by Mark Rodger, the municipality's legal counsel at Borden Ladner Gervais LLP, please visit our website.
The Town's RFP process, which began in September of 2016, solicited proposals from a wide range of potentially interested parties with a view to maximizing the value of the Town's remaining investment in Collingwood PowerStream Utility Services Corp. Given the terms of the existing USA with PowerStream, the Town has very limited options regarding how it may monetize its remaining 50 percent investment in the local electricity distribution company and must adhere to the requirements set out in the USA.
At the meeting held January 30, 2017, Council decided to pursue discussions with EPCOR who had also proposed a services arrangement to operate the Town's water and wastewater system under the Town's continued ownership. However, at the Council meeting held April 25, 2017 Council decided not to consider water and wastewater in potential hydro share sale negotiations with EPCOR.
Although it had been hoped that the process would be finalized by the end of the summer 2017, Council was advised that the timeline would extend into the fall.