By BRIAN WALKER
Hagadone News Network
SPOKANE — Avista Corp. on Wednesday announced it is being purchased by Toronto-based Hydro One Limited for $5.3 billion to create "a North American leader in regulated electricity and natural gas."
Hydro One and Avista customer rates will not be impacted by any of the costs associated with the transaction, officials from both companies said.
No workforce reductions are anticipated, said Avista Corp. Chairman, President and CEO Scott Morris.
Avista's billing process won't change, and the company will maintain its name and company headquarters in Spokane.
"There will be no changes to operations," Morris said. "It will be business as usual for us. The only difference is we'll be owned by one shareholder — Hydro One."
The transaction is expected to be completed in the second half of 2018.
It was unanimously approved by the boards of both public companies and is pending Avista shareholder, regulatory and government approvals.
Morris said Avista didn't get pressure from its shareholders to sell nor was the company for sale. Talks about a purchase started earlier this year, he said.
"We just saw it as a time that, when we are strong, we can be even better," he said.
Avista serves more than 128,200 customers in Idaho.
Regionwide, the utility serves 379,000 customers in North Idaho, eastern Washington and parts of southern and eastern Oregon.
Hydro One serves 1.3 million customers in rural Ontario and is the province's largest distribution utility.
Morris said the sale will not change Avista seeking a two-year rate hike for its electric and natural gas customers in North Idaho to pay for replacing or upgrading infrastructure.
"We'll continue to run the business as we always have and invest in infrastructure," Morris said.
If approved by the Idaho Public Utilities Commission, the rate increase would mean a $7.03 increase in the monthly bill for a residential electric customer using an average of 910 kilowatt hours from $86.39 to $93.42, starting Jan. 1, 2018. On Jan. 1, 2019, that customer’s monthly bill would climb $4.02 to $97.44.
Residential natural gas customers using an average of 61 therms per month would see an increase of $3.37 per month in 2018, taking their bill from $51.10 to $54.47, and a $2.07 increase in 2019 to $56.54.
The Avista-Hydro deal will combine two utilities with more than 230 years of collective operational experience as well as shared corporate cultures, Morris said.
"For Avista, the decision to team up with Hydro One at a time of strength and growth represents a win for our customers, employees, shareholders and the communities we serve," he said.
Hydro One will acquire Avista for $53 per share. The companies will have a combined $25.4 billion in assets.
Officials from the companies said the purchase will mean increased efficiencies in innovation, shared information technology systems, heightened purchasing power to provide cost savings to customers, and better customer service.
"This combination means greater scale, diversity and financial flexibility," said Mayo Schmidt, president and CEO of Hydro One Limited.
The pending deal is already drawing reaction from stakeholders.
Doug Howell, of the Sierra Club, said he hopes Hydro One will be fiscally responsible to start planning now for what the environmental group believes will be a transition away from coal energy.
He criticized Avista for a lack of foresight to set aside cleanup funds for a coal plant in Colstrip, Mont., that the utility receives energy from. Howell believes it puts Avista customers at risk of a sudden rate increase if the plant closes early.
Avista's management team and employees will remain in place and it will operate with its own board of directors. The nine-member board that will be formed after the transaction will include four Avista representatives, including Morris; two Hydro One reps, including Schmidt; and three independent reps from the Inland Northwest.
The combined company's headquarters will be based in Toronto.
"Avista employees and retirees will see a continuation of the company essentially as it is today," a press release states. "Customers of both companies will continue to be provided with safe, reliable and high quality energy."
Morris said Hydro One is committed to nearly doubling community donations that Avista currently provides.