Hydro One flexes power in massive U.S. deal

Avista purchase puts firm in top 20 electric companies

Hydro One is buying a massive U.S. utility in a $6.7-billion deal being touted as a win by the Ontario government, which currently owns 49 per cent of the transmitter.

The Toronto-based company, the majority of which Premier Kathleen Wynne sold off to bankroll transportation infrastructure, announced Wednesday it was purchasing Avista, which operates in Washington state, Oregon, Idaho, Montana and Alaska.

“This marks a proud moment for Canadian champions as we grow our business into a North American leader,” said Hydro One president and CEO Mayo Schmidt, who noted it would vault the firm into the continent’s top 20 electricity companies.

Schmidt said the transaction “demonstrates the power and value of the transition into an investor-owned utility, by allowing for healthy expansion into new lines of regulated utility business and new jurisdictions, such as the U.S. Pacific Northwest which is experiencing customer and economic growth.”

It will have no effect on electricity rates in the province, which are regulated by the independent Ontario Energy Board.

Energy Minister Glenn Thibeault, whose government has taken heat for privatizing Hydro One, said Queen’s Park was “pleased” by the acquisition, which is subject to approval by U.S. regulators.

“In particular, we welcome the fact that this proposed acquisition will not impact the rates that Ontario customers pay. Neither will it have any impact on local jobs,” he said.

After the deal closes by the middle of next year, the province’s stake in the company will drop to about 44 per cent. The Liberals have promised to retain at least 40 per cent of it.

“As the single largest shareholder in Hydro One, the Ontario government would benefit from the company’s receipt of additional regulated returns expected to begin in 2019,” said Thibeault, stressing those proceeds are “above and beyond” the $9 billion the government has already made from selling off the majority share in the utility.

It’s unclear how large those returns would be, but it could be in the tens to hundreds of millions annually.

Avista, based in Spokane, Wash., operates power plants fuelled by hydro, wind, biomass and coal.

It provides electricity to 379,000 customers and natural gas to 342,000 households and businesses.

The company said “no workforce reductions are anticipated as a result of this transaction.”

By next year, the expanded Hydro One will be a utility with more than $32.2 billion in assets, serving two million customers.