Avista Seeking OPUC Permission for Merger With Ontario’s Hydro One
Posted on December 20, 2017 by Will Gehrke
Tags, Energy
Hydro One has signed a deal to purchase the Avista Corporation for $5.3 billion. Who is Hydro One, and why are they purchasing a utility in the Pacific Northwest? Hydro One is a Canadian electricity distribution utility based out of Ontario. Avista Corporation is a gas and electric utility based out of Spokane, Washington with a service territory that includes areas of Oregon, Washington, and Idaho. Currently Avista’s customers in Oregon are exclusively natural gas consumers.
Hydro One was initially founded as a public corporation to build and manage the transmission network in Ontario and was owned by the Province of Ontario. In 2015, Ontario made Hydro One into a publicly traded company, though the provincial government of Ontario still currently owns 50 percent of Hydro One as a shareholder. Therefore, Hydro One is not directly controlled by the Ontarian government.
Shareholders in corporations want steady growth in their investment, and Hydro One has limited options to expand in Canada. Future growth in the demand for electricity and gas is driven primarily by economic and population growth. Over the past decade, Canada has experienced slow and steady population growth. Many utilities are government-owned in Canada, which makes them ineligible for sale. Therefore, Canadian utilities are unable to purchase many domestic utilities. Hydro One, like other Canadian utilities, is looking south to the United States to expand their business.
In order for the Oregon Public Utility Commission to approve a merger, the “no harm” standard needs to be met. If the Commission decides that a merger harms customers, it will disallow the merger. This is not unprecedented; in 2002, the Oregon Public Utility Commission rejected Texas Pacific’s bid for Portland General Electric because it offered minimal benefits to customers.
While it is still unclear as to the impact this major international merger might have on customers, CUB will be tracking this merger to ensure that it provides a net benefit to Oregonians. Watch for future blogs where we will provide analysis about and updates on the merger process.
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12/20/17 | 0 Comments | Avista Seeking OPUC Permission for Merger With Ontario’s Hydro One