The sale of Avista Corp. to a Canadian utility passed a major milestone Tuesday, when the parties outlined conditions in a proposed agreement with Washington regulators.
After the $5.3 billion sale, Avista would operate as a wholly owned subsidiary of Hydro One Ltd. of Toronto.
Hydro One has agreed to keep Avista’s headquarters in Spokane, retain similar workforce levels and continue as a major player in the region’s economic development efforts.
The proposed settlement still must be approved by the three-member Washington Utilities and Transportation Commission, which has scheduled four public hearings on the sale in late April and early May. Commission members are expected to make a decision in the fall.
“Reaching this agreement brings us one step closer to the completion of the merger, and we remain on schedule to close in the second half of the year,” Avista officials said in an email to customers Tuesday.
Avista has about 600,000 customers in Washington, Idaho and Oregon, and it owns an electric utility in Alaska. The utility’s sale to Hydro One is subject to approval by regulators in each state where Avista does business and several federal approvals.
“The proposed Avista Utilities settlement offers numerous benefits for customers and communities affected by the merger,” Noah Long, legal director for the Natural Resource Defense Council’s Western Energy Project, said in a Tuesday news release.
The Natural Resources Defense Council was among 12 parties that signed the proposed settlement, including the Utilities and Transportation Commision’s staff, NW Energy Coalition, Northwest Industrial Gas Users, the Sierra Club and the state Attorney General’s Office of Public Counsel.
They said the settlement protects Avista’s customers while making important commitments to renewable energy and energy-efficiency programs.
The settlement also provides protections for Avista by insulating it from financial risks at Hydro One, they said. The settlement tightens requirements for dividends paid to Hydro One and restricts Avista’s ability to lend money to its parent company.
The proposal includes:
Rate credits and deposits. Avista’s Washington customers would receive $30.7 million in rate credits for five years, an increase from the initial proposal of $19 million in rate credits. The settlement also would eliminate security deposits for new residential customers and return existing deposits held for more than six months.
Charitable giving. At the close of the sale, Hydro One will make a $7 million donation to Avista’s foundation. For at least five years after the sale, $4 million annually will be budgeted for charitable causes in Avista’s service territory and $2 million annually will be donated to the foundation.
Low-income assistance. Hydro One would provide $6 million to low-income energy-efficiency programs, including replacing older manufactured homes. Five million dollars would be dedicated to renewable energy projects benefiting low-income customers.
Electric vehicles and home energy audits. The settlement would set goals for outreach to customers about the benefits of owning an electric vehicle. It would provide 2,000 home-energy audits at a cost of $300 per home over a decade.
Colstrip Plant. Avista is a part owner in units 3 and 4 of the coal-fired plant in Montana. Under the settlement, Avista and Hydro One would agree to a depreciation schedule that assumes the remaining useful life of those units is through the end of 2027.
The settlement includes $3 million from Hydro One and Avista to help the town of Colstrip attract other industries. It also commits Avista and other Colstrip owners to identifying opportunities for new energy projects on the transmission line running from Colstrip to Avista’s service territory.
So far, the Washington Utilities and Transportation Commission has received 24 written comments on the proposed sale. Twenty-two are opposed, one is in favor and one undecided.