Ford de­fends Hy­dro One changes

The Recorder & Times (Brockville) - - ONTARIO NEWS - SHAWN JEF­FORDS

TORONTO — Doug Ford de­fended his de­ci­sion to shake up the se­nior ranks at Hy­dro One de­spite crit­i­cism that the move led to the col­lapse of the util­ity’s multi-bil­lion planned takeover of an Amer­i­can com­pany.

In an un­apolo­getic state­ment is­sued Thurs­day, the On­tario premier said he re­mained com­mit­ted to im­prov­ing the par­tially pri­va­tized util­ity, which has the prov­ince as its largest share­holder.

“Our gov­ern­ment ran on a clear prom­ise to clean up the mess at Hy­dro One,” Ford said. “This in­cluded a firm com­mit­ment to re­new the Hy­dro One se­nior lead­er­ship that had lost the con­fi­dence of On­tario ratepay­ers.”

The premier’s com­ments came af­ter the Wash­ing­ton Util­i­ties and Trans­porta­tion Com­mis­sion re­jected Hy­dro One’s $6.7-bil­lion takeover of Avista Corp. on Wed­nes­day over con­cerns of po­lit­i­cal in­ter­fer­ence.

The reg­u­la­tors had pointed to Ford’s move to force the Hy­dro One chief ex­ec­u­tive to re­tire as proof that the prov­ince was will­ing to in­ter­vene in busi­ness op­er­a­tions.

Mayo Schmidt’s early re­tire­ment was quickly fol­lowed by the res­ig­na­tion of the util­ity ’s en­tire board, as well as down­grades and lower val­ues of Hy­dro One and Avista shares.

Ford noted that Schmidt — who he had dubbed the “six mil­lion dol­lar man” — and the util­ity ’s for­mer board were the ar­chi­tects of the Avista deal.

“This is a deal that was put to­gether by the for­mer board and for­mer CEO of Hy­dro One — a deal that did noth­ing to lower hy­dro rates for On­tario res­i­dents,” he said. “Our gov­ern­ment re­mains un­wa­ver­ing in our com­mit­ment to the peo­ple of On­tario to re­duce hy­dro rates and pro­vide a re­li­able en­ergy sys­tem.”

Hy­dro One stands to face more than $133 mil­lion in penal­ties over the quashed deal, ac­cord­ing to trans­ac­tion doc­u­ments.

En­ergy Minister Greg Rick­ford noted, how­ever, that reg­u­la­tors in two more U.S. states still had to make their own de­ci­sions on the deal, al­though it was un­clear what chances the trans­ac­tion had of suc­ceed­ing given the Wash­ing­ton State re­jec­tion.

“I think it would be ir­re­spon­si­ble to com­ment on any fee that we would in­cur and dis­rupt a process that’s still very much avail­able to both Hy­dro One and Avista and the two other reg­u­la­tors that are yet to make a fi­nal de­ci­sion,” Rick­ford said.

Rick ford also said the Wash­ing­ton reg­u­la­tors had not blamed the scut­tling of the deal on any one gov­ern­ment.

“If you read the de­ci­sion you’ll see very clearly about a con­cern of past, present and pre­vi­ous pos­si­bil­i­ties of gov­ern­ment in­ter­fer­ence,” he said.

The Wash­ing­ton reg­u­la­tors, how­ever, re­peat­edly raised red flags about the Ford gov­ern­ment’s dump­ing of Schmidt and the board of di­rec­tors.

“Pro­vin­cial gov­ern­ment in­ter­fer­ence in Hy­dro One’s af­fairs, the risk of which has been shown by events to be sig­nif­i­cant, could re­sult in di­rect or in­di­rect harm to Avista if it were ac­quired by Hy­dro One,” they said. “This, in turn, could di­min­ish Avista’s abil­ity to con­tinue pro­vid­ing safe and re­li­able elec­tri­cal and nat­u­ral gas ser­vice to its cus­tomers.”

The prov­ince’s op­po­si­tion par­ties blamed the Ford gov­ern­ment for the deal fall­ing through.

NDP leg­is­la­tor Ian Arthur said the reg­u­la­tors’ de­ci­sion “makes it clear that Doug Ford’s po­lit­i­cal med­dling has sent shock­waves through the busi­ness com­mu­nity and in­creased the risk of do­ing busi­ness in On­tario.”

Liberal Mitzie Hunter said the mes­sage to Ford should be clear: “stop med­dling at Hy­dro One.”

Ob­servers in the busi­ness com­mu­nity also voiced con­cerns.

Robert Catel­lier, an an­a­lyst for CIBC, called the Wash­ing­ton reg­u­la­tor’s rul­ing “damn­ing” and said it will make it hard for Hy­dro One to “mean­ing­fully ex­pand be­yond On­tario.”

“The Wash­ing­ton Util­i­ties and Trans­porta­tion Com­mis­sion made it clear in its or­der there is no merger com­mit­ment that can be made that could pro­tect Hy­dro One against provin­cially im­posed re­quire­ments that would con­strain its abil­ity to live up to its com­mit­ments un­der the set­tle­ment agree­ment,” he wrote.

Anita Anand, a Univer­sity of Toronto law pro­fes­sor and ex­pert on cor­po­rate gov­er­nance, said the com­mis­sion’s de­ci­sion means the Avista deal is “not go­ing any­where fast.”

“This is very bad news for Hy­dro One and very bad news for cor­po­rate gov­er­nance,” she said. “The premier in­ter­fered with the func­tion­ing of the cor­po­ra­tion.”

Anand said the reg­u­la­tors’ de­ci­sion should send a sig­nal to the Tories.

“The Ford gov­ern­ment claims that it is the gov­ern­ment for the peo­ple and that it’s open for busi­ness,” she said. “This deal, and the fact that it doesn’t ap­pear to be go­ing through, sug­gests that On­tario is not open for busi­ness and that this is not a gov­ern­ment for the peo­ple.”

Avista and Hy­dro One had filed a joint ap­pli­ca­tion with the com­mis­sion in Septem­ber 2017 to ap­prove the pro­posed merger agree­ment.

Un­der the deal, Avista would have be­come a wholly owned sub­sidiary of the Toronto-based elec­tric trans­mis­sion and dis­tri­bu­tion util­ity, but would have main­tained its cor­po­rate head­quar­ters in Spokane and con­tin­ued to op­er­ate un­der the same name, man­age­ment team and em­ployee struc­ture.

THE CANA­DIAN PRESS FILES

A Hy­dro One of­fice is pic­tured in Mis­sis­sauga, Ont. in 2015. On­tario premier Doug Ford is de­fend­ing his de­ci­sion to shake up the se­nior ranks of the util­ity.

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