Washington regulators have denied Canada-based Hydro One Ltd.'s proposed acquisition of Avista Corp, saying it does not serve the public interest.
The Spokesman-Review reports the $5.3 billion sale could not proceed without approval from the Washington Utilities and Transportation Commission.
The commission said the proposed sale would have subjected Avista and its customers to political and financial risk, and didn't provide a net benefit to customers as required by state law.
“The proposed transaction cannot be said to be consistent with the public interest when it is evident that decisions affecting Hydro One’s and Avista’s business operations and financial integrity are subject to political considerations that may motivate one provincial leader or another to make decisions and take actions in the future that may cause harm instead of promoting the best interests of Avista, its customers, and Hydro One’s non-government shareholders," the commission stated.
In September of 2017, Avista and Hydro One filed a joint application with the commission to approve the companie's proposed merger. Under the original proposal, Avista would have become a wholly-owned subsidiary of Hydro One based out of Toronto.
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.
The proposed merger required approval from the UTC as well as federal authorities and other state public service commissions in Avista’s service territory.
In its order Wednesday, the commission noted 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 percent of Hydro One’s common stock.
The commission determined the financial offerings and other benefits for Avista customers promised by the transaction, including rate credits, are inadequate to compensate for the risks Avista’s customers would face if the transaction was approved. The commission determined the proposed acquisition does not meet the net-benefit standard required by state law.
“Provincial government interference in Hydro One’s affairs, the risk of which has been shown by events to be significant, could result in direct or indirect harm to Avista if it were acquired by Hydro One, as proposed. This, in turn, could diminish Avista’s ability to continue providing safe and reliable electrical and natural gas service to its customers in Washington,” the commission stated in Wednesday’s order. “Avista’s customers would be no better off with this transaction than they would be without it.”
The commission further directed Avista to work with commission staff to return to customers $10.4 million in tax benefits left outstanding from Avista’s last general rate case.
The commission held four public comment hearings about the proposed merger throughout Avista’s Washington service territory this spring and received 471 public comments—385 opposed, 15 in favor, and 71 undecided.
Avista Corp said in a statement: "The companies are extremely disappointed in the UTC’s decision, are reviewing the order in detail and will determine the appropriate next steps."