Avista Corporation and Hydro One Limited on Dec. 7 filed a brief with the Idaho Public Utilities Commission explaining that their proposed merger is not affected by a 1951 code that bars certain governmental agencies and entities not regulated by the commission from acquiring electricity generation assets in Idaho. The brief comes in response to Avista Customer Group’s argument that the proposed acquisition of Avista differs from prior transactions in that the acquiring utility is controlled by a foreign government and hence barred by state law. Recent activities in the Province of Ontario, the largest shareholder of Hydro One with 47.4 percent ownership, show that the government entity’s influence is a real risk for the utility, the group noted. After Ontario’s general election in June, an agreement between the province and Hydro One resulted in the resignation and replacement of the utility’s board of directors and the retirement of the chief executive officer. Ontario also enacted a law restricting compensation of Hydro One’s executives and allowing the involvement of the government in issues typically reserved to the executive management and board.
The companies argued that the legislature specifically intended to prevent tax-exempt governmental bodies of other states from acquiring utility property in ldaho to protect its tax base and that the code does not apply to the merger because Hydro One and Avista are taxable for-profit corporations, not government entities. They said that Idaho will continue to receive taxes after the merger and the commission will retain regulatory authority over Avista. The brief explained that the merger will result in Avista being fully owned by Olympus Equity LLC, an Idaho limited liability company, whose stock will be held by Olympus Holding Corp., a Delaware corporation which is a subsidiary of Hydro One.
Washington regulators rejected the transaction on Dec. 5 noting that the changes in Ontario elevated the government’s political interests above that of stakeholders including investors who own 53 percent of the utility’s common stock. The proposed deal received approval from the federal energy regulator in January and Montana commission in June. Hydro One’s leadership changes have also disrupted regulatory approval process in Oregon.
Hydro One is Ontario’s largest transmission and distribution service provider. Avista is an electricity and gas utility serving Washington, Idaho, Oregon and Montana.
