The Washington Utilities & Transportation Commission has denied Canada-based Hydro One Limited’s proposed acquisition of Spokane-based Avista Corporation, expressing concern regarding recent actions by the Province of Ontario to maintain substantial influence over operations of Hydro One. Under the companies’ original proposal, Avista would have become a wholly-owned subsidiary of Hydro One, an electric transmission and distribution utility headquartered in Toronto, Canada. In March, the companies, UTC staff, and nine other parties reached a settlement on the proposed merger that would have provided more than $30 million in rate credits to Washington ratepayers over a 5-year period, provided more than $11 million toward low-income programs, provided for accelerated depreciation of Colstrip power plants in Montana, and set aside funds for economic transition efforts in Colstrip, Montana. Nevertheless, the commission determined the financial offerings and other benefits for Avista customers promised by the transaction, including rate credits, were inadequate to compensate for the risks Avista’s customers would face if the transaction was approved.
Even though Avista would have maintained its existing corporate headquarters in Spokane, Washington, and continued to operate in Washington under the same name, management team, and employee structure, the commission expressed serious concerns regarding control of the new utility by Province of Ontario and how that might affect the interests of Washington consumers. It pointed out that the Canadian utility had earlier described the Province of Ontario, which owns 47% of the company, as a passive investor that would not exert political pressure on the company. However, after the June 2018 general election in the Province of Ontario, in which there was a change of majority control, the province and Hydro One announced an agreement that resulted in the resignation and full replacement of Hydro One’s board of directors and the retirement of the utility’s CEO. The commission concluded that the agreement resulting in the resignation of the Hydro One board and CEO elevated the provincial government’s political interests above the interests of other stakeholders, including investors that own 53% of Hydro One’s common stock. It also noted that the action resulted in credit downgrades and decreased the value of Hydro One and Avista stock. Re Hydro One Limited, Docket U-170907, Order 07, Dec. 5, 2018 (Wash.U.T.C.)
Even though Avista would have maintained its existing corporate headquarters in Spokane, Washington, and continued to operate in Washington under the same name, management team, and employee structure, the commission expressed serious concerns regarding control of the new utility by Province of Ontario and how that might affect the interests of Washington consumers. It pointed out that the Canadian utility had earlier described the Province of Ontario, which owns 47% of the company, as a passive investor that would not exert political pressure on the company. However, after the June 2018 general election in the Province of Ontario, in which there was a change of majority control, the province and Hydro One announced an agreement that resulted in the resignation and full replacement of Hydro One’s board of directors and the retirement of the utility’s CEO. The commission concluded that the agreement resulting in the resignation of the Hydro One board and CEO elevated the provincial government’s political interests above the interests of other stakeholders, including investors that own 53% of Hydro One’s common stock. It also noted that the action resulted in credit downgrades and decreased the value of Hydro One and Avista stock. Re Hydro One Limited, Docket U-170907, Order 07, Dec. 5, 2018 (Wash.U.T.C.)