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Posted in: Practice & Procedure | Ratemaking | Ontario | Energy Policy

Aug 27, 2018

OEB Confirms Rejection of Hydro One’s Proposed Acquisition of Orillia Power Distribution

By David Stevens

On August 23, 2018, the Ontario Energy Board (OEB) issued a Decision and Order dismissing a motion to review and vary the OEB’s prior decision denying Hydro One’s application to purchase the shares of Orillia Power Distribution Corporation (Orillia Power). The OEB found that the moving parties (Hydro One and Orillia Power) had failed to meet the “threshold test” for whether the matter should be reviewed on its merits, and dismissed the motion.

As discussed in an earlier post, the OEB’s April 12, 2018, decision on this MAADs (Mergers, Acquisitions, Amalgamations and Divestitures) Application (the MAADs decision) found that Hydro One and Orillia Power had failed to establish that there will be no harm to Orillia Power ratepayers arising from the proposed transaction. Specifically, the OEB concluded that Hydro One had failed to establish that its cost structures will be no higher than Orillia Power’s absent the transaction (even taking into account efficiencies from the acquisition). This led the OEB to be concerned that Orillia Power ratepayers will pay more once they start to pay Hydro One’s rates (which will not happen until after a ten-year deferral period). In these circumstances, the OEB declined to find that the no harm test was met.

The moving parties advanced five grounds that they said raised questions of correctness of the MADDs decision. In its Decision and Order on the review and vary motion, the OEB considered each of these grounds, and determined that none of them raise questions about the correctness of the MAADs decision that is material and relevant to the outcome of the case.

It is not clear whether Hydro One and Orillia Power will appeal the MAADs decision to the Ontario Divisional Court. A press release from Hydro One simply states that “Hydro One is disappointed by this decision," and "[w]e will continue to work with the City of Orillia to seek a transaction that is in the interests of all stakeholders."

Interestingly, on the same day that the motion decision confirming the rejection of the Orillia Power acquisition was released, the OEB issued a Decision and Order in another MAADs proceeding, approving the acquisition of Midland Power Utility Corporation by Newmarket-Tay Power Distribution Ltd. In this case, the OEB found that the proposed transaction meets the no harm test and approved the application, subject to some relatively minor modifications from what had been proposed. 

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