Six months ago, Avista and Hydro One announced plans to combine and form one of North America’s largest regulated utilities. Since that time, as we’ve moved toward closing, our confidence has only grown in the benefits of this merger for all of our stakeholders, from our customers and employees to our shareholders and the communities we serve.
Given the central role that Avista plays in its service territories, both as an energy provider and a member of the community, we understand why customers and community members want assurances that they will continue to receive safe, reliable and high-quality energy at a fair price and that Avista will continue to be an active corporate citizen.
The short answer is that the proposed transaction is designed to help preserve –
- Avista will continue to operate the business locally, under the same name, from the same headquarters in Spokane, with the same management team and employees.
- Avista customers will continue to be provided with safe, reliable and high-quality energy.
- Rates will not be impacted by any of the costs associated with the transaction. Independent state regulators such as the Washington Utilities and Transportation Commission will continue to determine energy rates, including the costs covered in customer rates.
- In fact, as part of the transaction, we’ve proposed providing rate credits totaling $32.5 million to Avista’s electric and natural gas customers in Washington, Idaho and Oregon and AEL&P’s customers in Alaska, for 10 years, beginning at the time the merger closes.
- Canadian government policies will not influence or dictate Avista operations; Avista will continue to be subject to U.S. regulations and U.S. laws.
Over time, this partnership will enhance our ability to serve our customers by enabling us to extend our use of technology, best practices and business processes over a broader customer base and set of infrastructure. The strength and resources of our combined company will drive the accelerated deployment of innovative programs and infrastructure upgrades for the benefit of our customers. Both Avista’s and Hydro One’s customers will benefit from their utilities’ increased purchasing power, sharing of best practices and economies of scale.
While we are very excited about the potential for the partnership, what we are doing is not new. Many foreign companies own utilities in the United States. For example, British, Spanish and Canadian companies have U.S. electric and natural gas utility subsidiaries, principally in the northeast but in other parts of the country as well. In 2016 alone, three Canadian companies acquired utilities in the U.S., following several acquisitions by some of the same Canadian companies in previous years. These acquisitions were approved by federal and state regulators.
Furthermore, the governance structure under which Hydro One will hold Avista as a subsidiary will function to preserve Avista’s operational independence. While the province of Ontario is Hydro One’s largest shareholder, it is contractually obligated to act “as an investor and not as a manager,” and its nominees to the board of directors are independent of the government.
Avista has long believed that being a good corporate citizen and community partner is not only good for our community, but also core to our culture and integral to the success of our business. This commitment is critical to ensuring our ability to recruit and retain the best people in order to provide the highest quality service for our customers. As part of Hydro One, this commitment will only be strengthened, as Hydro One, who would become Avista’s only shareholder, has committed to doing even more – nearly doubling Avista’s current levels of community support.
This partnership represents an exciting opportunity for our companies, our customers and our communities. Elements of the transaction were specifically designed to ensure that Avista’s customers and communities continue to receive what they have come to expect from a company that has been a leader in the Pacific Northwest for more than 100 years. We look forward to building on this history of service and citizenship for decades to come.
Scott Morris is chief executive officer of Avista Corp.
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter.