stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
Hydro One scraps planned $4.4-billion takeover of Avista
space
Utility to pay $103-million breakup fee after perceived interference from Ontario's PC government
space
By ANDREW WILLIS
  
  

Email this article Print this article
Thursday, January 24, 2019 – Page B1

Hydro One Ltd. formally called off its planned $4.4-billion takeover of Avista Corp. on Wednesday and will pay the U.S.

utility a US$103-million termination fee for a deal that failed due to perceived political interference from Ontario's Progressive Conservative government.

The decision to kill the takeover ends a U.S. expansion strategy championed by former Hydro One chief executive Mayo Schmidt, who struck an agreement to buy Spokane, Wash.-based Avista in the summer of 2017. The takeover required approval from regulators in states such as Washington and Idaho, where Avista runs electricity and natural gas transmission networks. As part of the transaction, Hydro One agreed to pay Avista a predetermined fee if the deal did not close by March, 2019, to cover legal and investment banking expenses and the opportunity costs that come with a failed transaction.

The two companies, which together would have had two million customers and ranked among the 20 largest North American utilities, said Wednesday that they "mutually agreed" to call off their merger. Paul Dobson, acting president and CEO of Hydro One, said in a news release: "Hydro One's Board, management and employees remain focused on delivering safe and reliable power, providing exceptional customer service and driving shareholder value."

Hydro One is 47-per-cent owned by the government of Ontario after being partly privatized in 2015. In Ontario's provincial election last year, Progressive Conservative Leader Doug Ford made rising power prices and Mr. Schmidt's $6-million in annual compensation part of his campaign, promising to fire the Hydro One CEO and bring down power prices by 12 per cent if elected.

In October, after Mr. Ford was elected Premier, Mr. Schmidt departed and the entire Hydro One board resigned.

Two state regulators subsequently turned down Hydro One's takeover bid. In explaining its decision in December, the Washington Utilities and Transportation Commission said: "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."

In January, the Idaho Public Utilities Commission said: "It is abundantly clear that the province does not have to own 51 per cent of Hydro One in order to effectively control the company.

Based on the recent events surrounding the province's intrusions into Hydro One corporate affairs, any other conclusion would be unreasonable and ignorant in light of the uncontested facts and evidence." Ontario Energy Minister Greg Rickford noted in a statement on Wednesday that Hydro One, under Mr. Schmidt, agreed to pay the US$103-million termination fee and said any costs incurred by the deal's cancellation "will not be paid by Ontario electricity customers." He added the failure of the deal "doesn't change our focus on bringing down hydro rates by 12 per cent."

In the wake of the U.S. regulators' announcements, Mr. Ford had defended his government's decision to intervene in Hydro One's governance and the Avista takeover. In December, Mr. Ford said: "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."

Hydro One earned a profit of $194-million on revenues of $1.6billion in the most recent quarter, the three months that ended Sept. 30, which means the US$103-million termination fee to Avista will amount to approximately 70 per cent of the Canadian utility's quarterly income.

Hydro One also announced on Wednesday that it will redeem $1.54-billion of debentures issued in 2017 to fund the Avista acquisition.

Hydro One is currently searching for a new CEO, with the provincial government and company sending different messages on what the next boss could earn.

Hydro One chair Tom Woods, who was appointed by the provincial government, said in testimony last fall to U.S. regulators that the next CEO could earn up to $4-million.


Huh? How did I get here?
Return to Main Andrew_Willis Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page