Washington regulators hear from skeptical crowd at hearing on Avista’s sale to Canadian utility

Avista customers told the Washington Utilities and Transportation Commission on Monday they’re happy with their local electric and natural gas utility and see little benefit from the company’s sale to a Canadian corporation.

About 80 people attended the public hearing on Avista Corp.’s proposed $5.3 billion sale to Hydro One Ltd., of Toronto. While some customers spoke in support of the sale, many who testified were skeptical or suspicious.

“This city was founded on water power. It’s a legacy that I think is akin to our national parks,” Spokane resident Larry Snider told the three-member commission. “Let’s not give away a treasure that really belongs to the citizens of Spokane.”

William Geibel Jr., who owns a small business in Spokane Valley, said he was uncomfortable with a Canadian utility owning Avista’s electricity-generating assets. The government of Ontario is Hydro One’s largest shareholder, although it doesn’t have a controlling interest in the publicly traded company.

“The idea of selling that infrastructure to a foreign entity is something I don’t think we should consider,” Geibel said.

Others worried the sale could result in higher rates in the future.

UTC Chairman David Danner told the crowd that he and the other two commissioners will do a thorough job of reviewing the proposed sale.

“This will be a difficult decision,” he said. “We will take our duties very seriously.”

The commission must evaluate whether the Spokane-based utility’s sale to Hydro One meets the state’s “net benefit” standard, which requires utilities to demonstrate that ratepayers would not be harmed in a sale or merger and would actually benefit from the transaction.

The Legislature passed the requirement after an Australian company purchased Puget Sound Energy, the state’s largest utility, in 2009.

Avista executives attended Monday’s hearing, but didn’t testify. After the sale, the Spokane-based utility would become a wholly-owned subsidiary of Hydro One. Avista’s headquarters would remain in Spokane, and the utility would still have to get permission from Washington regulators to raise rates.

Through a proposed settlement, Avista and Hydro One have agreed to a number of sale conditions intended to meet Washington’s net benefits standard. That includes $30.7 million in rate credits over five years for Washington customers, which would be worth about $1.27 per month on a typical electric and gas bill.

The settlement also outlines commitments for charitable giving and energy assistance for low-income households and provisions intended to isolate Avista’s ratepayers from future financial risks associated with Hydro One.

“I found this agreement to be very ratepayer friendly,” said Jim LeTellier, an Avista customer from Liberty Lake, told the commission.

He applauded a provision that accelerates the depreciation schedule for Avista’s partial ownership in Colstrip, a coal-fired plant in Montana, to 2027.

“This plant has gone from being an asset to a liability,” LeTellier told the commission. “Avista and Hydro One need to set a date for closing it.”

Julie Honekamp, chief executive officer for the low-income advocacy agency SNAP, also testified.

“I do believe that Avista is taking the long view for our future,” Honekamp told the commission. In an era of consolidation among publicly traded utilities, “you may as well choose your partner,” she said.

SNAP applauds Hydro One’s commitment in the settlement to $6 million in low-income energy-efficiency programs, Honekamp said.

But she encouraged the utility to put a low-income advocate on its board. The settlement provisions would expire five years after the sale, and the community needs long-term assurances, she said.

Tom Horne, an Avista customer from Nine Mile Falls, voiced similar concerns.

“I’ve been an Avista customer for 41 years,” he said. “These short-term sweeteners won’t last 41 years.”

The Utilities and Transportation Commission will vote on the sale by mid-August. Avista and Hydro One expect the sale to be final later in the year.