The Idaho Public Utilities Commission on Jan. 3 determined that the proposed sale of Washington-based Avista Corporation to Canada-based Hydro One Limited would violate state law that bars the transfer of regulated electric utility assets to an entity that is owned or controlled by another state. The move follows similar action last month by Washington regulators over concerns of political interference. Idaho regulators noted that the Province of Ontario is Hydro One’s largest shareholder and also maintains governance agreements that provide “significant control and influence over the utility.”

After Ontario’s general election in June last year, 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 Idaho code should be interpreted to include only other states within the U.S., but the commission disagreed saying that the statute broadly applies to territories, foreign nations, and Canadian provinces. A settlement filed in April includes provisions intended to protect Avista and its customers from financial risk associated with the transaction. The agency said that the prohibitions of Idaho law “cannot be nullified with generous settlement terms and ring fencing” to protect Avista’s property and its customers.

The companies have a Jan. 24 deadline to file a petition for reconsideration of the decision. The duo have asked the Washington Commission to reconsider the denial. The proposed deal received approval from the federal energy regulator in January and Montana commission in June.

Hydro One is Ontario’s largest transmission and distribution service provider. Avista is an electricity and gas utility serving Washington, Idaho, Oregon and Montana.