Avista Corp.’s chief executive emphasized Wednesday the utility and its Canadian suitor, Hydro One Ltd., remain committed to gaining regulatory approval of a $5.3 billion deal that would combine the two.
During a morning conference call with analysts to discuss second-quarter results, Avista Chairman and CEO Scott Morris noted the impact of state regulatory commissions’ delays in approval of the sale following a political shake-up in Ontario last month that led to the ouster of Hydro One’s chief executive and its board of directors.
Originally set to close in late September, Hydro One’s purchase of Spokane-based Avista is now expected to be finalized sometime during the fourth quarter, Morris said.
“We have made significant progress in the Hydro One transaction, and we are continuing to work through the approval processes,” he said. “Hydro One and Avista Corp. are fully committed to working with the commissions, their staff and other parties to receive the required approvals …”
Avista Corp. reported an increase in second-quarter earnings, with income of $25.6 million, or 39 cents per share. The results compared to $21.8 million, or 34 cents per share, for the second quarter of 2017.
For the six months ended June 30, net income was $80.5 million, or $1.22 per share, compared to $83.9 million, or $1.30 per share for the six months ended June 30, 2017.
Morris said in a news release the company’s second-quarter earnings were “above our expectations,” primarily because of regulator-approved rate refunds to customers brought about by federal income tax reform that were less than the company anticipated.
“For the first half of 2018, we had consolidated earnings above our expectations, primarily from Avista Utilities,” Morris told analysts. “Avista Utilities’ earnings benefited from lower-than-expected resource costs and higher customer growth.”
Avista issued earnings guidance of $1.90 to $2.10 per share for the year, excluding the costs related to the company’s acquisition by Toronto-based Hydro One. The acquisition costs are expected to be in the $1.50- to $1.60-per-share range, up from an 80 cent- to 85 cent-per-share estimate in the first quarter. Avista said the increase is the result of effects of commitments from regulatory merger settlement agreements.
Regulatory boards in states where Avista operates must approve the sale to Hydro One. Some have given their approval – Alaska and Montana – and others have delayed decisions pending evaluation of leadership changes at Hydro One, the largest electric transmission and distribution utility in the province of Ontario with more than 1.3 million customers.
The Washington state Utilities and Transportation Commission was to make a decision by Aug. 14 on whether the sale would benefit Avista customers but has extended the deadline to Dec. 14.
In Idaho, the Public Utilities Commission also has put deliberations on the proposed sale on hold until after Hydro One’s new board is in place, which is expected to be by Aug. 15. A canceled technical hearing has not been rescheduled, but if a new Hydro One board and CEO are not named by that date, the commission has directed Avista to file an update on the circumstances.
Oregon regulators also have extended their timeline for considering the sale, Morris said Wednesday.
Ontario Premier Doug Ford, who took office in late June, campaigned on a platform to replace Hydro One CEO Mayo Schmidt and the utility’s board of directors. Under an agreement between Ford’s government and Hydro One, Schmidt retired July 11 and the board of directors resigned.
Avista stock ended the day Wednesday at 50.47 on the New York Stock Exchange, down 0.11 points.
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