10 answers to pressing questions about the sale of Avista Corp. to Hydro One

The proposed sale of Avista Corp. to Hydro One for $5.3 billion would chart new territory for customers of the Spokane-based utility.

Next week’s shareholder vote is a major milestone in the sale process. Here are some answers to questions about the transaction.

Q: Will Avista’s name change?

A: No. Avista will operate as a wholly owned subsidiary of Hydro One. It will keep its name and its corporate office in Spokane, including the headquarters at 1411 E. Mission Ave.

Q: When will the sale of Avista be final?

A: Avista and Hydro One expect to finalize the sale by mid-August. The sale still needs approval from state regulators in Washington, Idaho, Oregon and Alaska – where Avista has about 700,000 customers. Federal agencies also will review the proposed sale.

The transaction will be scrutinized by U.S. authorities for potential national security implications. The U.S. Federal Energy Regulatory Commission also must give its approval.

Q: What standard will state regulators use to evaluate the sale?

A: In Washington, Hydro One must demonstrate that ratepayers would not be harmed, and would benefit from the sale.

The Legislature passed the requirement – called the “net benefit standard” – after an Australian company purchased Puget Sound Energy, the state’s largest utility, in 2009.

Hydro One has proposed $31 million in rate credits over 10 years for Avista customers in Washington, Idaho and Oregon. After the sale, Avista’s charitable giving would increase from about $2.5 million annually to about $4 million.

Q: Can Avista customers weigh in on the proposed sale?

A: Yes. In each state where Avista sells electricity and natural gas, public utilities commissions are reviewing the proposed sale. Customers will be able to provide public comments.

In Washington, Spokane hearings will probably be in late May, said Amanda Maxwell, a spokeswoman for the state Utilities and Transportation Commission.

Q: Will Hydro One cut Avista’s staff?

A: Avista employs about 1,800 people. Hydro One has agreed to keep current employees in good standing at no less than their current pay and benefit levels for at least three years.

Q: Will future profits from Avista’s power sales go to Canada?

A: Yes. As a regulated utility, Avista is allowed the opportunity to earn a fair profit. In each state where Avista operates, public utilities commissions establish the profit margins Avista’s shareholders can earn.

After the sale, Hydro One will be the sole shareholder of Avista stock.

Q: How will I know my rates aren’t subsidizing Canadian customers’ bills?

A: Avista and Hydro One officials say their customers will benefit from economies of scale after the sale, but revenues from the companies won’t be commingled for rates.

State regulators will retain control over whether Avista raises or lowers rates.

Rate cases are complex legal proceedings. The Washington Utilities and Transportation Commission acts as a judge, weighing each utility’s need to cover costs and turn a profit against customers’ need for fair and reasonable rates.

The commission also reviews how much assistance Avista provides to low-income customers, and those reviews will continue after the sale.

Q: What future role will Avista play in the community in terms of philanthropy, economic development and innovation?

A: Avista’s large civic presence will continue, officials say.

As part of its pledge to increase Avista’s charitable giving in the communities it serves, Hydro One will make a $7 million contribution to Avista’s charitable foundation after the sale and a $2 million donation each year in the future.

Avista has played a major role in local economic initiatives, such as Expo ’74 and the 1980s Momentum Project that led to the creation of Spokane’s University District. Hydro One has agreed to continue funding economic development work at existing levels.

Avista also will continue to develop new technologies under Hydro One’s ownership. Itron, Ecova and ReliOn are three examples of companies started by Avista that spun off into separate businesses.

“Our history and spirit of innovation is one of the things Hydro One liked about us,” said Mark Thies, Avista’s senior vice president and chief financial officer.

Q: Who will run Avista after the sale?

A: Scott Morris, Avista’s chairman and chief executive, will continue to lead the company, along with the current executive officers. Avista’s new nine-member board of directors will contain a blend of Hydro One and Avista officers, along with three independent directors from the Pacific Northwest.

Q: Will the sale affect the pensions of Avista’s retirees?

A: No. Avista’s pension plans are subject to U.S. laws, and that won’t change.

The Employee Retirement Income Security Act of 1974 governs most private industry pensions. The law sets minimum standards to protect the financial interests of people enrolled in the plans.