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Legal fees in negotiations between City, Hydro One have surpassed $1-million

'That's essentially, at this point, over $1 million that's been wasted,' Mason Ainsworth said of deal that was nixed last week by Ontario Energy Board; City has 20 days to appeal
money

The City of Orillia has spent more than $1 million in legal fees in its ill-fated attempt to consummate a deal between Orillia Power and Hydro One.

“That is a huge amount of money – especially since the decision has been turned down by the Ontario Energy Board (OEB),” Coun. Mason Ainsworth told OrilliaMatters. “That’s essentially, at this point, over $1 million that’s been wasted.”

He fears more money might be wasted. “If council were, for instance, to go down the road of an appeal, how much more would that cost?” Ainsworth asked. “Usually when you appeal a decision, it costs a lot of money. Is this going to cost more millions down the road? Where do we draw that line?”

Staff revealed that legal fees had surpassed $1 million in response to a query from Ainsworth at a special council meeting that occurred prior to Monday night’s regular council committee meeting. Most of that meeting was held in closed session because its subject was deemed a “legal matter” related to Hydro One/Orillia Power.

Last Thursday, the OEB, in a move that surprised many, rejected a potential deal that would have seen the City of Orillia sell the distribution arm of Orillia Power to Hydro One. The OEB, in a 23-page decision, said, in essence, the deal did not pass its no-harm test and would have led, over time, to higher rates for Orillia’s electricity customers.

The city was approached by Hydro One in 2015 and, over time, agreed to sell the distribution arm of Orillia Power for $26.35 million, which officials estimated was double its value. As part of the deal, Hydro One agreed to assume the $10 million in debt Orillia Power had amassed and said it would protect the 36 affected jobs – for one year.

As part of the pact, Hydro One agreed to purchase up to 36 acres at the Horne Business Park where, if the deal was green-lighted, it would build an integrated systems operation centre. Hydro One said two other buildings – a warehouse and regional operation centre – would be built there regardless of the outcome of negotiations.

Ainsworth was one of three city councillors – along with Rob Kloostra and Sarah Valiquette-Thompson – who were not in favour of the deal. All three were happy the OEB nixed the pact.

Coun. Ted Emond was not happy and admitted he was “surprised” by the decision. He said he was unable to disclose much about Monday night’s closed session.

“I can only say we received a report from staff which included a summary … from our legal counsel,” said Emond, noting there was “discussion and disagreements amongst us” but, “in the end, the report was accepted as information.”

When asked to provide more details, Emond said: “Unfortunately, I cannot tell you because we are contractually and in terms of legal confidentiality and our relationship with Hydro One (unable to disclose) what our next steps are, if any.”

However, he said OEB regulations do allow for an appeal. “Under their rules, an appeal must be filed within 20 days. If that is the direction that’s taken, the appeal would be filed and would become a public document.”

Ainsworth was also frustrated by not being able to disclose more about the substance of the meeting. He hinted that a decision to appeal may be “completely circumvented by past materials,” that seemed to relate to a previous contract.

He said there would be “no need for a secret meeting” if the majority of council accepted the OEB decision. He is opposed to an appeal.

“I do not think city council should go through any sort of appeal process or even discuss an appeal process before there’s more public input,” said Ainsworth. “I really hope there would be some discussion on that rather than pushing it through behind the scenes.”

Emond countered that council has provided ample opportunity for input. He referenced a community forum and multiple attempts to educate citizens through media and other means during the negotiation process.

“There is a core group in the community that don’t think we should make the deal,” conceded Emond. “I personally think a lot of people have transferred their acquired dislike of Hydro One … and applied that to this deal without understanding the specifics of this deal. It’s very frustrating.”

It’s also frustrating that the many potential benefits of the deal, in the majority of council’s opinion, were not considered by the OEB. For example, proponents of the plan called it transformational and touted the potential for high-paying jobs, for an increase in the tax base and other positives.

“Those things are all beyond the OEB’s mandate,” said Emond. “They are not, however, beyond my mandate as a city councillor.”


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Dave Dawson

About the Author: Dave Dawson

Dave Dawson is community editor of OrilliaMatters.com
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