Hydro One, Avista to ask U.S. regulator to reconsider order against acquisition
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Hydro One Avista Takeover faces Washington UTC scrutiny as regulators deny approval; companies plan a reconsideration petition, citing acquisition terms, governance concerns, merger risks, EPS dilution, and balance sheet impacts across regulated utility operations.
Main Details
A $6.7B bid by Hydro One to buy Avista, denied by Washington UTC on governance risk, under reconsideration petition.
UTC denied over potential provincial interference.
Petition for reconsideration due by Dec. 17.
Deal seen diluting EPS, weakening balance sheet.
Hydro One Ltd. and Avista Corp. say they plan to formally request that the Washington Utilities and Transportation Commission reconsider its order last week denying approval of the $6.7-billion takeover, which previously received U.S. antitrust clearance from federal regulators, of the U.S.-based energy utility.
The two companies say they will file a petition no later than Dec. 17 but haven't indicated on what grounds they are making the request, even as investor concerns about Hydro One persist.
Under Washington State law, the UTC has 20 days to consider the petition, otherwise it is deemed to be denied.
If it reconsiders its decision, the UTC can modify the prior order or take any actions it deems appropriate, similar to provincial rulings such as the OEB decision on Hydro One's first combined T&D rates, including extending deliberations.
Washington State regulators said they would not allow Ontario's largest utility to buy Avista for fear the provincial government, which owns 47 per cent of Hydro One's shares and recently prompted a CEO and board exit at the utility, might meddle in Avista's operations.
Hydro One's shares have risen since the order because the deal, announced in July 2017, would have eroded earnings per share and weakened Hydro One's balance sheet, according to analysts, even as the company reported a one-time-boosted Q2 profit earlier this year.
