Dive Brief:

• Three Canadian municipal energy providers have proposed merging, and their agreement includes acquiring the assets of Hydro One Brampton from the Ontario government, PennEnergy reports. 
• Enersource, Horizon Utilities and PowerStream have submitted a merger proposal to the Ontario Energy Board. If approved, the three would combine to make the second largest municipally-owned electric utility in North America.
• The munis say their combination would provider lower rates for customers and higher cash flows; they expect the merger to take six months to complete.

Dive Insight:

Municipal utilities serving a half dozen Canadian towns filed this week a Mergers, Acquisitions, Amalgamations and Divestitures application with the Ontario Energy Board, citing lower rates and a stronger financial profile among the benefits. This fits in with a broader trend of consolidation seen amongst North American utilities

Data last year showed utility deals in North and South America reached $57 billion in the third quarter of 2015, marking a 5-year record for the quarter​.

If this most recent consolidation deal is approved, the stakeholders said the deal would result in lower distribution rates for customers, increased cash flow for municipal shareholders, and increased equity value. The increased cash flow would be available "for re-investment into local communities," they noted.

Enersource serves the city of Mississauga; Horizon Utilities serves Hamilton and St. Catharines; and PowerStream serves the cities of Barrie, Markham and Vaughan. Included in the merger agreement is a legal agreement to jointly purchase the assets of Hydro One Brampton from the Ontario Government, the companies said.

"The transaction will create one large utility company that is able to better serve customers for both regulated and unregulated services," the companies said in a statement.

Plans include a corporate holding company and head office, based in Mississauga; a regulated utility company based in Hamilton; and a sustainability and innovation company based in Vaughan. The regulated company will retain utility operations centers in Barrie, Brampton, Hamilton, Markham, Mississauga and St. Catharines, the companies said

"There would be no single controlling interest among the shareholders, ensuring all local interests will continue to be served," they added.