Flow of Energy

By Zach Hagadone
Reader Contributor

Those in favor of the proposed merger of Avista Utilities and Toronto, Canada-based Hydro One tout the $5.2 billion deal as an economy of scale that will benefit ratepayers while lessening coal power dependence and boosting renewable energy investment. Opponents, however, see foreign influence, stockholder greed and long-term price hikes lurking in the details.

Image by theodysseyonline.com.

Sandpoint residents will have their say at a 6 p.m. public hearing Wednesday, June 13 at Sandpoint High School, 410 S. Division Ave. Another 6 p.m. meeting will take place in Coeur d’Alene on Thursday, June 14 at Midtown Meeting Center, 1505 North Fifth St.

The Idaho Public Utilities Commission released the hearing dates May 10 along with the announcement that a tentative settlement had been reached in the case, which would see Spokane-based Avista become a subsidiary of the Canadian energy company. According to the commission, the merger, if approved, sets up one of the largest utilities in North America, worth more than $25 billion. A final decision could come by mid-August with the deal closed before the end of the year.

Of the 249 comments received by the PUC as of May 21, only about 20 were in favor—almost all from Moscow and most containing variations on the same verbiage calling the merger “a good deal” for utility customers and lessening “the liability to north Idaho ratepayers of the increasingly expensive and risky Colstrip power plant.”

Among the provisions of the tentative settlement is the agreement by Avista and Hydro One to apply deferred federal income taxes to accelerate the depreciation of Avista’s partial ownership of the Colstrip coal-fired energy plant. The useful life of the eastern Montana facility, saddled with debt and cleanup-related expenses, would be set at Dec. 31, 2027. The agreement includes $3 million to be put toward a transition fund to assist employees affected by the Colstrip closure.

Under the terms of the agreement, Idaho customers would also receive $15.8 million in rate credits spread over five years. That amounts to about $1.38 on Idahoans’ monthly bills. Energy efficiency, conservation and low-income programs would receive from more than $5 million in funding under the terms of the deal.

While concerns over local control dominated the public comments received by the PUC, Avista and Hydro One insisted that the utility would continue to operate from its Spokane headquarters, with the current managing team and staffing levels in place. The Avista board, however, would be restructured to include nine members, five of whom who would be named or designated by Hydro One—though potentially including residents of the Pacific

Northwest who meet the standards for independent directors. Three directors would be carried over from the current Avista’s board at the time of approval as well as Avista’s chief executive officer.

The tentative settlement includes structures meant to provide some check and balances between the companies’ business interests while Idaho law protects ratepayers from bearing any costs related to the merger. Rather, shareholders would pay expenses incurred by the transaction. The PUC would remain the local regulatory authority over Avista’s operations in Idaho regardless of the merger.

Assurances aside, almost all the comments submitted to the PUC raised grave concerns about the loss of local control, pointing to uneasiness that energy policies in Canada might influence the rates and service levels for Avista customers. A common theme of the comments was the worry that Hydro One may one day opt to sell out to another country—specifically China or Russia—likewise transferring ownership of Avista. The more dire of those commenters feared potential global conflict could then result in the cutting off of energy supplies or damage to energy infrastructure.

While the Federal Energy Regulatory Commission allowed the merger to go forward in January, the PUC stated the deal must comply with federal antitrust laws and undergo review by the Committee on Foreign Investment in the U.S. to address national security.

“As Avista is our only source of electrical power it is a monopoly and we fear the Public Utilities Commission would have little or no control over Hydro-One’s actions being it is in a foreign country,” wrote Stanley and Kathleen Cook, of St. Maries, in a May 12 comment representative of many others’ concerns.

Marianne Fernandez, of Rathdrum, wrote in a May 11 comment that she feared Avista customers’ monthly payments would flow to the Canadian province of Ontario, rather than benefit locals. While $15.8 million in rate credit sounds generous it “is very miserly when the math is done to spread it to every customer and it is spread over many years,” she wrote, “it’s less than many could find in change that falls behind the cushions or near sidewalks.”

Find more details on the settlement, including all supporting documents and public comments, at puc.idaho.gov under File Room, Electrical Case AVUE1709.