BY KEITH LACEY
Greater Sudbury Hydro is getting bigger and better and expansion plans are just beginning, says board chair Doug Craig.
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Craig was beaming after Friday?s announcement in Sturgeon Falls that Greater Sudbury Hydro Inc. had formally purchased West Nipissing Energy Services.
The deal will see Greater Sudbury Hydro pay $2 million on closing and some additional money generated from expected rate increases to West Nipissing Energy Services, which provides hydro to 3,500 clients in and around Sturgeon Falls.
The deal is conditional upon the transaction being approved by the Ontario Energy Board, but Craig is confident there will not be any roadblocks, as he believes the deal is thorough and comprehensive.
The board from West Nipissing Energy approached the Sudbury board back in November and negotiations have been ongoing for three months prior to Friday?s announcement, said Craig.
The deal had to be closed in early February in order for Sudbury Hydro to qualify for a tax exemption offered by the province, which will bring in excess of $800,000 back to the utility, said Craig.
Since the province deregulated the energy industry early in the new millennium, smaller energy companies like West Nipissing have found it increasingly difficult to operate and make any kind of profit, said Craig.
?The smaller companies, particularly those in northeastern Ontario, just don?t have the economies of scale and expertise in-house,? he said. ?They are forced to pay big money to consultants and it has become more and more difficult to try and break even or make any kind of profit.?
Sudbury Hydro has the personnel, expertise and technological advances to help deliver services to its 3,500 new customers, said Craig.
?We are very pleased to acquire this asset and look forward to serving our new customers,? he said.
No one will lose their job as a result of the deal, said Craig.
The employees of West Nipissing Energy are under contract and all terms and conditions of their collective agreement will be honoured by the Greater Sudbury Hydro board, he said.
?We expect a seamless transition,? Craig said. ?We will honour the current contract and I don?t foresee any difficulty with our new employees blending in with our current workforce here in Greater Sudbury.?
In all likelihood, this deal isn?t the only one Greater Sudbury Hydro will be involved in over the short and long term, said Craig.
?I think it?s important we establish ourselves along the Highway 17 corridor,? he said. ?We have the expertise and technology and the ideal location to
expand our business.?
Other small energy companies like West Nipissing simply can?t afford to provide any decent level of service at competitive rates and will be forced to look to sell to larger companies like Sudbury Hydro, Craig predicts.
?I do feel we will continue to look at opportunities for growth and expansion,? he said.
Paying $2 million dollars is a lot of money in any transaction, but with expected rate increases, Craig believes the local board can recover its entire investment in less than three years.
?There is no question in my mind that when we look back at this deal 10 years from now, it will be viewed as a very sound business investment,? he said.
Craig mentions rate increases are coming, but adds those increases will still provide the 23,000 Greater Sudbury Hydro customers with some of the lowest hydro rates in the country.
Those who still receive their hydro from Hydro One pay anywhere from 15 to 75 percent higher rates than those offered by Greater Sudbury Hydro for the same level of service, said Craig.
