Apr. 26, 2002. 01:00 AM - Hydro One selling its retail energy business
John Spears
BUSINESS REPORTER
Hydro One has decided to exit the business of marketing fixed-price electricity and natural gas contracts in Ontario, and will sell its retail energy business to a unit of Edmonton's Epcor Utilities.
Union Energy Inc., purchased by Epcor in November, will pay Hydro One $48 million for its 395,000 customers when the deal closes April 30.
The sale comes with the provincially owned company in the throes of trying to put itself in the hands of private investors through an initial public offering. The offering has been blocked by a court judgment, but the province has announced plans to appeal the ruling or pass legislation necessary to circumvent it.
Epcor is owned by the City of Edmonton.
The deal will make Union an instant player in the electricity market, giving the company 196,000 electricity contracts sold by Hydro One to homeowners and businesses. The contracts come into force when Ontario's electricity market opens for competition May 1. The contracts were sold by Hydro One's retail unit, Ontario Hydro Energy Inc.
Union also gets Hydro One's 14,000 natural gas contracts, plus 185,000 contracts for water heater rentals, to go with Union's existing portfolio of 884,000 water heater contracts.
Hydro One spokesperson Terry Young said the company decided to sell because it wants to concentrate on its core business of owning and operating electric wires. The retail customers are lumped in with Hydro One's "other" businesses, which accounted for only $49 million of Hydro One's $3.5 billion revenue in 2001.
Vaughn Goettler, chief executive of Union Energy, said Hydro One's customers combined with Epcor's retailing skills will help Union build a base in Ontario's retail market.
Union had not joined the likes of Direct Energy and Toronto Hydro Energy Services, which hired squads of marketers to sell fixed price contracts door to door.
"We postponed our entry into marketing electricity on the anticipation of the successful completion of this deal." He said the acquisition won't trigger the loss of any jobs.
torontostar.ca |
