Hydro One hearing: Lawyer, execs spar

BOISE — The Idaho Public Utilities Commission heard the first day of a two-day technical hearing on the sale of Avista to Hydro One Monday. Avista Customer Group attorney Norm Semanko grilled Hydro One executives throughout the day as to how Hydro One’s acquisition of Avista might comply with state law or impact ratepayers. PUC commissioners also interjected with questions during cross-examination.

Semanko queried officials on whether the transaction would meet the requirements of Idaho Code § 61-328(3), which requires that such a sale be in the public interest. In a memo to the commission, Semanko opined that it did not.

“It is not in the public interest for a utility in Idaho to be owned and/or controlled, directly or indirectly, by the Province of Ontario, Canada,” he wrote.

He also inquired about whether the sale would meet the provisions of I.C. § 61-327. Semanko probed witnesses’ opinion on the definition of “state” in Idaho law.

Hydro One’s provisional chairman, Tom Woods, told commissioners that the two companies have compatible cultures. Acting chief financial officer Chris Lopez said that like Hydro One, Avista is rurally based and rooted in hydroelectricity. Woods added that Hydro One wants to diversify its base through the purchase.

While cross-examining Woods, Semanko probed for possible Ontario provincial influence over Avista. Woods admitted that the current Ontario premier, Doug Ford, had campaigned on the issue of replacing Hydro One’s CEO and board, but told Semanko that the provincial government had not meddled with the day-to-day operations of Hydro One during the four months that Woods had served as Hydro One chairman. Woods said the province, which controls approximately 47 percent of Hydro One’s stock, will benefit from the company’s success. He told Semanko that he does not expect the province to interfere in the company’s operations.

Semanko also sought to determine whether the provincial government would exercise control over wholly-owned subsidiaries such as Avista would become. A future provincial government could introduce any legislation it chooses regarding Hydro One, but the province has no legal right to legislate anything regarding Avista, Woods said. There is nothing Ontario could do to change the structure of Avista, Lopez said.

“There is no risk there,” he said.

Semanko asked if Avista’s assets could be pledged or sold by Hydro One. Lopez said there was no chance of that happening. Avista’s assets can only be used for Avista customers, he said. Lopez said that Avista will remain a stand-alone business.

“We want Avista to operate as efficiently as it can, on its own,” he said.

Lopez also said that rates for Avista customers have to be no higher than they would have been if there had been no transaction.

Acting chief executive officer Paul Dobson told Semanko that per the merger agreement, Hydro One will not assign any costs to Avista. Lopez also said that Hydro One will not share costs with Avista customers.

Dobson told commissioners that Hydro One is fully committed to meeting the terms of the agreement. The sale has to close by March 29, 2019, or the two companies will have to extend the transaction or come up with a new transaction, Dobson said.

The technical hearing lasted from 8:30-4 p.m. Pacific time on Monday and will reconvene at 7:30 a.m. Pacific time today. PUC president Paul Kjellander said Tuesday’s session will go into the evening as long as needed. To listen by telephone or online, go to: https://www.puc.idaho.gov/conference.html