Veridian Corporation and Whitby Hydro Energy Corporation announced June 26 that all five municipal shareholders had approved a proposed merger of the two companies to create a new yet-unnamed energy corporation. The two municipal electricity utilities and the municipal shareholders are now positioned to execute a merger agreement, following which the transaction will be submitted to the Ontario Energy Board for regulatory approval.
The five shareholders of the two utilities include: the Municipality of Clarington, which approved the proposed merger on June 11; the Town of Ajax, which approved the proposed merger on June 18; and, the City of Belleville, the Town of Whitby, and the City of Pickering, which each approved the proposed merger on June 25.
The announcement continues that, with the approval of municipal shareholders secured, Veridian, Whitby Hydro and their shareholders will now enter into a merger agreement and submit a Mergers, Acquisitions, Amalgamations and Divestitures (MAADs) application to the OEB for regulatory review and approval. The OEB process reviews many aspects of the merger, including a “No Harm Test”, that ensures the proposed merger does not have an adverse effect on ratepayers. A merger would only take place following OEB approval and assuming normal legal conditions set out in the agreement have been met.
The merger promises to offer Veridian and Whitby Hydro customers greater rate stability, along with protection from potential future rate increases. Customers can also expect access to more resources during major outage events, 24/7 control room capabilities across the entire service area, and better overall customer experience as the merged company leverages the capabilities of both utilities. Shareholders reportedly expect stronger, more sustainable cash flow in interest and dividends, and about $90 million in operational cost savings over the next 17 years. Municipal shareholders are expected to receive increased dividends, which would offset tax increases and can be reinvested in local communities.