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Hydro One and Avista sign settlement agreement in Oregon [free access]

May 8, 2018

Toronto-based Hydro One Limited (Hydro One) and Washington-based Avista Corporation have signed a settlement agreement with the Public Utility Commission PUC of Oregon staff, Oregon Citizens' Utility Board, Alliance of Western Energy Consumers and the Oregon and Southern Oregon District Council of Laborers, regarding their impending merger. The parties intend to file the complete agreement with the Oregon PUC later this month.

 

The settlement majorly includes provisions related to financial protections for the utility and its customers, financial benefits through a rate credit for all Oregon customers, and funding for low-income customers. However, the other terms will be disclosed when the agreement is finalised and filed with the Oregon PUC.

 

Under the merger deal, Hydro One is planning to acquire Avista for a value of USD5.3 billion, and together these companies will carry out regulated electricity and natural gas business in North America with over USD25.4 billion in combined assets. The settlement would speed up the depreciation schedule for Colstrip Units 3 and 4 at the Colstrip coal-fired plant in Montana, clearing the way to shut it early. Puget Sound Energy (PSE) and Talen Energy co-own Units 1 and 2, which are scheduled to be closed by 2022, while Avista, PSE, Talen, Portland General Electric, PacifiCorp and NorthWestern co-own Units 3 and 4.

 

The transaction received approval from Avista shareholders on November 21, 2017, from the Federal Energy Regulatory Commission (FERC) on January 16, 2018, and the anti-trust clearance on April 5, 2018, following the expiration of the waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976. Applications for regulatory approvals are still pending with utility commissions in Washington, Alaska, Idaho, Oregon and Montana. In addition to this, different all-parties, all-issues settlement agreements were filed with the Washington Utilities and Transportation Commission (WUTC) on March 27, 2018, the Regulatory Commission of Alaska (RCA) on April 3, 2018 and the Idaho PUC on April 13, 2018.

 

The parties expect to close the deal during the second half of 2018.