Avista Corp. (NYSE: AVA) said Nov. 4 that it has signed a definitive agreement to acquire Alaska Energy and Resources Co. (AERC), a privately-held company based in Juneau, Alaska.
When the transaction is complete, AERC will become a wholly-owned subsidiary of Avista Corp.
The purchase price at closing will be $170m, less the assumption of debt and other customary closing adjustments. The transaction will be funded through the issuance of Avista common stock to the shareholders of AERC. The transaction is expected to close by July 1, 2014, following the receipt of necessary regulatory approvals and the satisfaction of other closing conditions.
The primary subsidiary of AERC is Alaska Electric Light and Power (AEL&P), the oldest regulated electric utility in Alaska. In 2012, AEL&P had annual revenues of $42m and a total rate base of $111m. AEL&P, with 60 fulltime employees, serves about 15,900 customers in the city and borough of Juneau.
The utility has a firm retail peak load of about 80 MW and serves nearly 100% of its load with 102.7 MW of renewable hydroelectric capacity. The utility has 93.9 MW of diesel generating capacity to provide back-up service to all firm customers when necessary.
“AEL&P’s 120-year culture of service and community partnership is a great long-term fit with Avista Corp.,” said Avista Corp. Chairman, President and CEO Scott Morris. “We have found the company to have similar cultural values and focus on providing safe, reliable service to its customers that Avista has held dear for nearly 125 years. We look forward to working with AEL&P’s highly skilled and dedicated management and employees, and to being part of the Juneau community. This agreement reflects Avista’s strategy to expand and diversify energy assets and deliver long-term value to the customers, communities and investors we serve.”
“AERC’s board of directors wanted to find a qualified utility buyer that would focus on providing reliable and competitively priced electric service, be a contributing member of the Juneau community and provide an environment for AEL&P employees to continue to realize job satisfaction and accomplishment,” said Tim McLeod, AEL&P president and general manager. “Avista, whose corporate culture is remarkably similar to that of AEL&P, satisfies these needs very well.”
Avista Corp., incorporated in 1889 and based in Spokane, Wash., is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is the operating division that provides electric service to 362,000 customers and natural gas to 322,000 customers. Its service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.5 million.
Notable is that AEL&P on June 11 filed a statement of its intentions with the Federal Energy Regulatory Commission for the re-development of a long-abandoned hydroelectric facility on Sheep Creek in the City and Borough of Juneau. The powerhouse would be located near the mouth of Sheep Creek near the site of the abandoned powerhouse and adjacent to the existing AEL&P substation which serves customers in the area. The powerhouse would house a single 3.3-MW generating unit.