CUB Opposes Hydro One’s Purchase of Avista
Posted on October 11, 2018 by Will Gehrke
Tags, Energy
The utility landscape in the Pacific Northwest is fragmented. Across North America, large utilities are looking to the Pacific Northwest to expand their utility operations. There are six investor owned utilities currently operating in Oregon. The acquisition of Avista, by Canadian utility Hydro One, is currently being examined by the Oregon Public Utility Commission (PUC). Recent political events regarding Hydro One have led CUB to oppose this merger.
CUB had previously agreed to Hydro One’s proposal. The province of Ontario is the largest owner of Hydro One, which is unusual from an American regulatory prospective where government is not usually a shareholder of a private for-profit company. Hydro One assured the PUC and stakeholders that there is no involvement between Hydro One and the province of Ontario. The company pointed to a governance agreement between Hydro One and Ontario as a binding document establishing their relationship. CUB was convinced that Hydro One would operate as an independent corporation.
Meanwhile, earlier this year, the province of Ontario elected a new premier to lead the provincial legislature. Doug Ford, brother of infamous Toronto mayor Rob Ford, won the election. Provincial premiers are roughly equivalent to the position of an American governor. Among Doug Ford’s campaign promises was to sack Hydro One’s Chief Executive Officer and remove its board of directors in order to reduce rates in Ontario. Since Doug Ford has been elected, the entire board and Hydro One’s CEO have been terminated. This is highly concerning. CUB does not believe that it is to the benefit of Avista’s customers to have their utility controlled by the whims of a foreign legislature. This situation would be similar to Oregon’s governor replacing the CEO of Portland General Electric.
The actions of the Ontario government lead us to believe that Hydro One is not in a position to guarantee independence in its operations. Utilities are responsible for providing safe and reliable service to customers. The management of a utility should not be a political campaign issue. CUB is concerned with the long term stability of Hydro One’s business model due to the role of the province of Ontario. With each election, Hydro One’s governance and business strategy could shift. Additionally, there is no absolute limit on Ontario’s authority over Hydro One because Ontario has the ability to change laws regarding the operation of the utility.
Up until now, Avista has been an independent utility operating out of Spokane, Washington. Avista has provided reliable and safe gas service to Oregonians for several decades. This merger would expose these customers to the Ontario political system. Avista is better off without being owned by Hydro One. CUB will continue to monitor and provide updates on this merger case here on our blog – stay tuned.
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10/11/18 | 0 Comments | CUB Opposes Hydro One’s Purchase of Avista