THI and ERTH Power collaboration a go

Jeff Helsdon, Editor

A possible merger between Tillsonburg Hydro Inc. and ERTH Power will move forward, subject to Ontario Energy Board approval.

The possibility of the merger was first raised last fall, with needed upgrades to the Tillsonburg transformer station as one of the primary reasons. Preliminary estimates for adding more capacity through that project are $29 million.

The collaboration will see Tillsonburg acquire shares in ERTH Corporation, a municipal holding company that owns ERTH Power Corp. and other unregulated companies under the corporate umbrella. Tillsonburg will be the second-largest shareholder among the 10, behind Ingersoll.

ERTH Power started with the former Erie Thames Powerlines in 2000, which saw the utilities for Ingersoll, Thamesford, Otterville, Norwich, Tavistock, Aylmer, Belmont, and Embro amalgamate. The name was changed to ERTH Power, and Clinton, Mitchell, Dublin, and Goderich joined in.

The decision to go ahead was made by council in an in-camera session on April 21, and announced the next day. According to the release, the decision was driven by several factors, including:

• Capacity- Existing infrastructure is nearing its capacity and must be expanded to support projected industrial growth.

• Capability - As the energy sector evolves, demand is increasing for specialized expertise in engineering, regulatory compliance, and senior leadership.

• Connectivity - Utilities must modernize systems to enhance reliability, enable automation, and strengthen cybersecurity, requiring ongoing investment and technical expertise.

• Compliance - Smaller utilities are held to the same regulatory standards as larger utilities, often with fewer resources to meet these requirements efficiently.

• Consolidation - Proactive consolidation among like-minded local utilities can improve service delivery, increase operational efficiency, and deliver long-term benefits for customers, communities, shareholders, and employees.

Tillsonburg Mayor Deb Gilvesy said the number one concern raised at merger open houses held last fall was response times during outages. The town went back to the table with these concerns in hand, pushing for them to be addressed.

Several concessions were made. As THI employees are transferred to ERTH, both former THI employees and current ERTH employees who live in Tillsonburg will take home company vehicles so they can respond from home in the event of an outage, without having to go to ERTH’s office in Ingersoll to pick up a company vehicle first. In addition, the THI location on John Pound Road will remain open, and there will be a dedicated customer service person in the Tillsonburg Customer Service Centre for billing inquiries.

“This new operational direction by ERTH solidified that this should not be an issue,” Gilvesy said of response times.

“We’ve negotiated and made sure these measures were in place that will minimize any impact to response times,” added THI board of directors chair Dan Rasokas.

The move to ERTH operating Tillsonburg’s utility may not be as radical as residents may think. Rasokas pointed out ERTH operated the utility for a spell several years ago and has been serving as management for THI since 2023.

Saying ERTH has the same small-town philosophy, he added, “The job they’ve done has been phenomenal. The way they do the job, the resources they have behind them will be good for Tillsonburg.”

He addressed what is likely the number one question on THI customers' minds – rate changes – by saying only inflationary changes will take place until the next service application is made to the Ontario Energy Board (OEB) in 2031. At that point, the upgrades to the transformer station will be coming into play. Whereas before rates could have doubled as THI’s 8,600 customers absorbed $29 million in costs, now it will be spread across ERTH’s 58,600 customers.

When the next application is made, rates for Tillsonburg will be the same as what’s paid in other ERTH towns. Rasokas said this “won’t be an impact because the rates are pretty much the same.”

There are provisions in the contract in case upgrades to Tillsonburg’s transformer station, which has only 10 megawatts of capacity left, are needed before then.

“We have protection against the worst-case scenario without facing any changes in our rates until we have to,” he said.

Under terms of the deal, Tillsonburg will have one representative on the ERTH Corporation board of directors, and another to ERTH Power’s board. In addition, Tillsonburg will have the right to appoint an additional director to the ERTH Power board for three years as a transition measure.

“We’re proud to welcome Tillsonburg as a shareholder and to build on the strong working relationship already in place,” said Chris White, President and Chief Executive Officer of ERTH Corporation. “By bringing our utilities together, we can enhance service, strengthen system reliability, and provide the scale needed to support future investment while maintaining stable rates for our customers.”

Currently, the town receives about $200,000 in dividends annually from THI. Going forward, this will be replaced by ERTH dividends. Rasokas pointed out that ERTH’s non-regulated business includes streetlight upgrades, EV charging station installations, billing, and many other facets that will also share profits with the town.

“There’s this extra revenue stream they have,” he said. “While it won’t come through in the rates, any dividends will benefit the Town of Tillsonburg in the future.”

A part of those extra services will be providing billing for Tillsonburg’s water and sewer customers.

Gilvesy pointed out ensuring the THI employees will be looked after was a top priority. All jobs are guaranteed for three years, and seniority and service credits will be maintained. She believes there will be more opportunities for advancement for employees with the move to ERTH.

The collaboration is subject to approval by the Ontario Energy Board. A part of this process is a no-harm test to ensure customers of a utility are no worse off with a proposed change. This typically takes six months.