Montana regulators approve, with conditions, merger of Hydro One, Avista

Hydro One Limited (TSX:H) and Avista (NYSE:AVA) on June 12 said that the Montana Public Service Commission has voted to approve – with conditions – the proposed merger involving the companies.

“The Montana Public Service Commission voted to approve the merger during an open meeting yesterday, and a final order from the commission is expected in the coming weeks,” an Avista spokesperson on June 13 told TransmissionHub.

In reaching its decision, the commission adopted the commitments as originally filed in the docket but reserved, on its own motion, the right to incorporate heightened commitments relevant to Montana established in other jurisdictions, the companies said in their statements. The commission did not accept, for rate making purposes in Montana, an accelerated 2027 depreciation schedule for Colstrip, as otherwise agreed to by the parties in Washington, the companies noted. The commission also approved the addition of a condition that requires Avista to submit copies of its integrated resource plans to the commission, the companies said.

According to the spokesperson, under the commitments, Avista would continue to operate as a standalone company under the same name, from the same headquarters in Spokane, Wash., with the same employees and "management team, overseen by a board of directors with significant Pacific Northwest representation, and with the same levels of high quality service for customers." The spokesperson also noted that Avista will continue its philanthropy and economic development in the communities that it serves, with Hydro One committing to "nearly doubling current levels of community contributions."

Applications for regulatory approval of the transaction are still pending with regulators in Washington, Idaho and Oregon, the companies said in their statements, adding that an all-parties, all-issues settlement agreement was filed with the Washington Utilities and Transportation Commission in March. An all-parties, all-issues settlement agreement was filed with the Idaho Public Utilities Commission in April, while an all-parties, all-issues settlement agreement was filed with the Public Utility Commission of Oregon in May 25, the companies said.

As TransmissionHub reported, according to the merger application that the companies filed with Washington regulators, for instance, under the terms of the all-cash transaction, Avista shareholders would receive $53 per common share, representing a 24% premium to Avista’s last sale price on July 18, of $42.74 per share. The aggregate purchase price is about $5.3bn, comprised of an equity purchase price of $3.4bn and the indirect assumption of about $1.9bn of debt, the application noted.

Also, as TransmissionHub reported, the companies earlier this month said that they have received approval from the Regulatory Commission of Alaska (RCA) for the companies’ proposed merger, subject to certain conditions, including that there will be no rate recovery of transaction costs or premium associated with the acquisition.

Hydro One and Avista, in their June 12 statements, noted that they received the Federal Communications Commission’s consent in May to close their merger, as well as antitrust clearance in April after the expiration of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The transaction received approval from FERC in January, and from Avista shareholders last November, the companies said. The Committee on Foreign Investment in the United States completed its review of the proposed merger in May and has concluded that there are no unresolved national security concerns with respect to the transaction, the companies noted, adding that also required is the satisfaction of other customary closing conditions.

About Corina Rivera-Linares 3054 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.