Thunder Bay, Kenora hydro companies explore potential merger

The locally-owned hydro companies in Thunder Bay and Kenora, Ont. have signed amemorandum of understanding to explore a potential merger.

The proposed venture, which was announced in a press release Friday, would help both utilities operate in an increasingly complex power industry, in part byachieving economies of scale,said Robert Mace, the president and CEO of Thunder Bay Hydro,

"You don't need to have two audits, you don't need to do two sets of filings to your regulator, you don't have to have multiple insurance policies," he told CBC News.

"Part of what we're doing through this process is putting together a business model for when those efficiencies would kick in and, frankly, what the transition costs are."

A merger could help reduce the price of electricity in Thunder Bay and Kenora, Mace said.

Other utilities examining consolidation

In Friday's press release, Mace was quoted as saying that a number of utilities in Ontario are exploring or actively pursuing consolidation.

"As this complexity continues, larger, better resourced utilities will be better positioned to effectively and efficiently meet the needs of our customers," he added.

The president and CEO ofKenora Hydro also noted that the two companies are already working together on initiatives like smart meters and office support.

"Thunder Bay does our after-hours callouts, we have a joint plan for conservation and demand management and a lot of the administrative functions are handled through Thunder Bay, so anywhere it makes good business sense to share those services, we are currently doing so," said Dave Sinclair.

According to the joint statement, the hydro companies will start analysing the feasibility of a merger and how customers and the municipalities would be affected.

Mace added that there will be public discussions on the proposal, and recommendations are possible by late spring 2017.

Any potential merger must be approved by city councils in both municipalities.

Thunder Bay Hydro employs 130 people and has 50,000 customers, while Kenora Hydro employs 14 people and serves 5,600 customers.