Idaho puts end to Hydro One merger

Pack it in. Go home. Don’t even wait for the regulator in Washington to rule on Hydro One’s appeal to please let it take over Avista Corp.

In a ruling Thursday, the Idaho Public Utilities Commission struck the deal dead citing Hydro One’s lack of independence from the government of Ontario.

“Hydro One is not purely a private, publicly traded corporation,” the Idaho PUC said in a release, echoing what the Washington regulator had concluded just weeks earlier. “Rather, the management of Hydro One is subject to the Province’s political pressure, legislative power, and special governance agreements.”

This lack of independence, the PUC concluded, “dictates our decision to reject the proposed merger.”

Those who have argued that political interference directed by the premier of Ontario did not throw a spanner into the spokes of this transaction can stop now. Had the $5.3-billion (U.S) deal been approved, Avista would have become a wholly owned subsidiary of Hydro One, albeit with headquarters still in Spokane, Wash. And, for a time, it looked as though that was inevitable. After all, the parties involved had a long list of settlement agreements that were meant to satisfy concerns over rates and happiness over “rate credits” and assistance to low-income rate-payers. Good works would be sprinkled about.

But customer opposition in Idaho grew and grew as Idahoans were invited to submit their thoughts to the regulator. (“I can’t believe I even have to write this letter, because what the heck is a company from a totally different country doing attempting to buy a utility company of another country, and, in this case specifically, one of our utility companies in the United States.” And so on.) A customer group was granted intervenor status. More than 600 public comments were submitted, “nearly all in opposition,” the regulator noted.

In November, I interviewed Norman Semanko, the lawyer representing that customer group. Semanko was about to argue before the regulator that the proposed deal would breach a state statute that restricts utility ownership by a foreign government.

“There are some of us down here in the States who are looking at this, saying this is still really a Crown corporation. It’s just that they sold some of the stock so they could build roads and infrastructure,” Semanko told me.

“They still very much exercise control over Hydro One.” The premier proved the point.

In its ruling, the commission cited that very statute, which specifically bars the transfer of a regulated electric utility to an entity “owned or controlled, directly or indirectly” by another state. The applicants — that is, Avista and Hydro One — tried to argue that by “state,” the statute meant to refer only to a state in the U.S.

Fantastically, the commission caught the madness of this. “The applicants’ narrow concept of state would yield the absurd result of prohibiting purchases by entities owned by other states of the United States, while allowing such transactions if the entity is owned by a foreign government,” the commission said. But back to the politics. It was crystal clear to the commission that the province doesn’t need 51 per cent to exercise control. “Based on the recent events surrounding the Province’s intrusions into Hydro One corporate affairs, any other conclusion would be unreasonable and ignorant in light of the uncontested facts and evidence. Consequently, we find that Hydro One has acted in concert with the province of Ontario, formally and informally, directly and indirectly,” the commission stated.

In an email, Norman Semanko commended the commission for its interpretation of Idaho law. “In the end, our group was the only party who made this argument to the commission, and we are glad to see that it prevailed.”

He hopes this brings an end to what he calls a “long ordeal.”

The applicants have until Jan. 24 to petition the commission for reconsideration. In a joint press releas,e the companies said they were disappointed and are considering next steps. This deal has become shopworn and should end.

Here’s a question for the premier: if Hydro One isn’t a private, publicly traded corporation, what exactly is it? And to shareholders: what is it exactly that you own?