Relief from rising electricity rates could be on the way for London Hydro customers.
London Hydro Inc. says it has been assessing opportunities to merge or amalgamate with another utility. Due to confidentiality and a non-disclosure agreement, the other utility has not been named.
In a letter sent to the Strategic Priorities and Policy Committee last Thursday, board chair Mohan Mathur said if a merger were to happen, it would likely result in a reduction of electricity rates for residents.
“Customers are expected to benefit from future rate reduction arising from efficiency gains,” said Mathur.
London Hydro doesn’t need approval from the city of London to begin merger talks, but has sent the letter to the city to make sure they’re kept apprise of their activity.
While the utility hasn’t revealed who they’re talking with, that could become clearer before the end of the year. If a merger were to happen, the new entity could be operational by January 2018. Mathur says the merged entity would continue to to have a strong local presence, and would maintain offices in the city.
There has been a lot of consolidation in the industry in recent years. In 1996 there were over 300 local distribution companies like London Hydro, that number had shrank to 66 by last year.
London Hydro is currently the 7th largest municipal utility in the province, servicing over 153,000 customers.
The utility pays a 40 per cent dividend to the City of London, their only shareholder, every year. That wouldn’t change under a possible merger. The dividend paid $10 million annually to the City for the past two years.
London has considered changing the make-up of London Hydro before. The most recent case happened five years ago when EPCOR Utilities Inc., which is based in Alberta, considered buying London Hydro.
The Strategic Priorities and Policy Committee will review the letter when they meet Monday at 4 p.m.