Tillsonburg Hydro and ERTH Power exploring collaboration

Jeff Helsdon, LJI Reporter

Tillsonburg Hydro and ERTH Power are exploring a collaboration that will strengthen the local utility and meet the community's future needs.

The Town of Tillsonburg is the sole shareholder and owner of Tillsonburg Hydro Inc. 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.

It was stressed that no decision has been made yet, and two public input sessions have been scheduled. The first is Sept. 29 from 3 to 6 p.m. at the Lion’s Den in the Tillsonburg Community Centre, and the second is the same hours on Oct. 6 at the Tillsonburg Town Centre.

Several factors have driven the proposed collaboration, but one of the main drivers is the need to expand Tillsonburg’s electrical capacity and the cost of such an expansion. Tillsonburg currently has only 10 megawatts of capacity available, and two industries under construction will require four megawatts, leaving only six megawatts remaining.

Tillsonburg Mayor Deb Gilvesy said the need to expand is imminent, as another new industry could cut into the remaining six megawatts.

A press release announcing the potential merger explained the cost of such an expansion would be at least $29 million. With 8,600 customers, Tillsonburg Hydro would have to double at least the fixed distribution portion of the monthly utility bills to cover the costs.

Other factors playing into the issue are:

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

•        Connectivity - Utilities must modernize outdated systems to ensure reliability, enable automation, and protect against cybersecurity threats—all of which requires ongoing investment and technical expertise.

•        Compliance - Smaller utilities are held to the same regulatory standards as larger utilities, yet often lack the resources and capacity to meet these obligations efficiently.

•        Consolidation - Recent history has demonstrated that proactive consolidation among like-minded local utilities can result in improved service delivery, increased operational efficiency, and long-term benefits for customers, communities, shareholders, and employees.

"The community’s need for increased hydro capacity has been building for more than a decade,” says Tillsonburg Mayor Deb Gilvesy. “With Tillsonburg’s rate of industrial growth, our system has reached a critical juncture. Key decisions must be made to secure the future and ensure that rates remain fair and sustainable."

A potential collaboration would involve Tillsonburg exchanging the infrastructure owned by Tillsonburg Hydro for ERTH shares. This would make it the second largest of 10 shareholders in ERTH. Gilvesy said that current employees would be guaranteed jobs and would retain the same union and pension plan. Rates charged in Tillsonburg would not change if the merger took place, although there will still be inflationary increases.

“Through all the estimations and calculations we ran, the rate would be sustainable in the future and similar to what we have today,” Gilvesy said.

Continuation of a partnership

ERTH is not a new partner to Tillsonburg Hydro. After a small stint several years ago, the company replaced the general manager in spring 2023. ERTH is also contracted to replace the streetlights. Gilvesy said one of the concerns was a guarantee that ERTH would provide in-kind work like hanging up Christmas lights and the veteran’s banners, which has been secured. The two utilities also collaborated on storm response, delivering conservation initiatives, and participated jointly in community events.

“I don’t think from a consumer standpoint, they would notice a difference.”

The potential of a merger started with the Cost of Service Rate Application that all local distribution companies are required to file every five years with the Ontario Energy Board. Tillsonburg CAO Kyle Pratt explained companies are “required to demonstrate that they have considered collaboration and consolidation opportunities as part of their strategic planning, in order to improve efficiency, reduce duplication and enhance customer value.”

“ERTH and THI have worked closely through the past several years and this has been a natural next step to be considered in order to deal with the challenges facing utilities to further enhance efficiency and enhance customer value,” he said.

The application itself is a complicated process, Pratt explained, requiring Tillsonburg Hydro to retain outside expertise. ERTH, on the other hand, has this expertise in-house.

Benefits

If approved, the partnership would provide Tillsonburg hydro ratepayers with:

•        Economies of Scale

Sharing administrative, regulatory, and capital costs across a larger customer base will help stabilize rates and improve cost-efficiency.

•        Enhanced Financial Stability

Financial flexibility and diversified revenue streams will support long-term stability and profitability while helping to protect against significant rate increases.

•        Expanded Expertise and Capacity

A larger, locally owned utility will have access to a broader pool of skilled professionals and expertise, enabling infrastructure modernization, efficient emergency response, and opportunities for employee growth.

•        Empowered Communities

Local oversight will remain a top priority, with continued reinvestment in our communities and decisions that reflect local values and customer needs.

“Hydro board and council did not make this decision lightly - to borrow $25 would affect the town’s borrowing capacity. We value the town’s feedback and that’s why we are seeking public input,” Gilvesy said.

Besides the public engagement sessions, input can also be provided at tillsonburg.ca/strongertogether