The Utilities and Transportation Commission said the proposed merger with Toronto-based Hydro One doesn't adequately protect Avista or the utility's customers from political or financial risk.

Share story

OLYMPIA, Wash. (AP) — Washington state utility regulators on Wednesday denied the proposed $5.3 billion sale of Spokane-based Avista Corp. to a Canadian utility.

The Washington Utilities and Transportation Commission said the proposed merger with Toronto-based Hydro One Ltd. doesn’t adequately protect Avista or the utility’s customers from political or financial risk, and that isn’t in the public’s interest.

The three-member panel raised concerns about political influence by the Ontario government on operations of Avista and Hydro One. The province is Hydro One’s largest shareholder, with a 47 percent stake in the electric company that serves about 1.3 million customers.

“In the final analysis, the Commission determines that the evidence demonstrates that Hydro One lacks sufficient independence from its former owner and now largest shareholder, the Province of Ontario, to be a reasonable and appropriate merger partner for Avista,” the commission wrote.

Washington’s commission is one of several regulatory entities that must approve the merger. Public utility commissions in Montana and Alaska approved the transaction earlier this year, but decisions are pending in Idaho and Oregon.

“The companies are extremely disappointed in the UTC’s decision, are reviewing the order in detail and will determine the appropriate next steps,” Avista and Hydro One said in a joint statement Wednesday.

The commission said that Hydro One officials in testimony described the role of the province as a passive investor that would not exert political pressure on the company. However, the panel noted that in July, the newly elected Ontario Premier Doug Ford announced the immediate retirement of the Hydro One CEO and the resignation of the utility’s entire board of directors.

The commission said that action elevated the provincial government’s political interests above the interests of other stakeholders.

Idaho public utility officials have expressed similar concerns about the provincial government’s influence.

Scott Morris, Avista’s chairman and CEO, has said that after the sale, Avista would be run by a separate board of directors, protecting its operations from political interference by the Ontario government, the Spokesman-Review reported last week.

Avista serves electric and natural gas customers in eastern Washington, northern Idaho and parts of southern and eastern Oregon. An Avista subsidiary, Alaska Energy and Resources Company, provides service in Juneau through Alaska Electric Light and Power Company.