20171005notice_of_application_order_no_33903.pdf

Office of the Secretary
Service Date
October 5,2017
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT )
APPLICATION OF HYDRO ONE LIMITED )CASE NOS.AVU..Ei709
AND AVISTA CORPORATION FOR )AVU-G-17-05
APPROVAL OF MERGER AGREEMENT )
)NOTICE OF APPLICATION
)
)NOTICE OF
)INTERVENTION DEADLINE
)
________________________________
)ORDER NO.33903
On July 19,2017,Avista announced that it had entered into a merger agreement with
Hydro One (“Applicants/Companies”).On September 14,2017,the Applicants filed the above
captioned joint application for approval of the merger.Approval of the Application would result
in Avista becoming a wholly owned subsidiary of a Hydro One holding company.The
Applicants have requested approval by August 14,2018,and have made the same request in
other state jurisdictions.
NOTICE OF APPLICATION
YOU ARE HEREBY NOTIFIED that Avista is a public utility engaged in the
generation,transmission and distribution of electricity and natural gas.Avista’s service area
includes eastern Washington,northern Idaho,and parts of southern and eastern Oregon.Avista’s
existing base rates and charges for electric and natural gas services were approved by the
Commission in December 2016 for electric service,and December 2015 for gas service.Order
Nos.33682 and 33437.
YOU ARE FURTHER NOTIFIED that Hydro One,operating through its principal
subsidiary Hydro One Inc.,is an investor owned electric transmission and distribution utility
headquartered in Toronto,Ontario,Canada.It provides electric distribution service to over 1.3
million customers,and transmission service to local distribution companies,and large customers
in Canada.The Province of Ontario owns a large minority share of the Company’s shares,with
the remainder of shares held by private investors.Hydro Onets common shares are listed on the
Toronto Stock Exchange (TSX:H).
YOU ARE FURTHER NOTIFIED that the Companies report that Avista stock will
be purchased by Hydro One at $53 per common share,or $5.3 billion,Hydro One will finance
NOTICE OF APPLICATION
NO I ICE OF INTERVENTION DEADLINE
ORDER NO.33903
the transaction through medium and long-term borrowing.and proceeds from a completed issue
of $1.54 billion of convertible unsecured subordinated debentures.After the closing,Avista
would be owned by Hydro One,through a series of wholly-owned subsidiaries.
YOU ARE FURTHER NOTIFIED that the Applicants claim that Avista customers
will benefit from the merger through benefits of scale that come with joining a larger
organization,and avoid the risk of acquisition by another party that may not share Avista’s
culture and values.Thus,the Applicants state that customers can expect the same or better levels
of service and customer satisfaction.Customers will also see financial benefit through retail rate
credits upon the closing of the transaction.Finally,the Applicants claim that,over time,the
merger will provide superior innovation,research and development,and efficiencies over a
broader customer base infrastructure.
YOU ARE FURTHER NOTIFIED that the Proposed Transaction is subject to
significant oversight:Avista shareholder approval;the Hart-Scott-Rodino Antitrust
Improvements Act;clearance by the Committee on Foreign Investment in the US;approval by
each state regulator,FERC,the SEC,and the FCC.No additional approval is required from
Canadian authorities.
YOU ARE FURTHER NOTIFIED that the Applicants state that the closing of the
transaction is expected to occur in the second half of 2018.
YOU ARE FURTHER NOTIFIED that,included with the proposed agreement,the
Applicants submitted detailed evidence in support,including memorialized agreements relating
to “Governance Requirements”(Exhibit A),“Post-Closing Matters,”and “Approval
Requirements”(Exhibit B).Pointedly,the agreement includes a provision that Avista’s Board of
Directors will retain authority to review,authorize and approve certain matters related to Avista,
without the obligation to obtain authorization or approval from Hydro One.Further,the
companies agreed that:(1)Avista’s headquarters will remain in Spokane;(2)Avista’s branding
will remain the same;(3)Avista’s office locations in its service areas will remain;(4)there will
be no workforce reductions resulting from the merger;(5)Avista’s existing management team
will remain;(6)existing compensation and benefit practices will remain;(7)Avista will retain
authority to negotiate and enter into agreements with bargaining unit employees;(8)the merged
company will maintain or improve safety and reliability standards;and (9)the merged company
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ORDER NO.33903
will maintain Avista’s community involvement and support initiatives at levels equal to.or
greater than,those prior to the merger.
YOU ARE FURTHER NOTIFIED that the Applicants state that,if the merger is
approved,the Avista Board of Directors will be a local board consisting of board members who
are chosen by Avista designees,and who reside in the Pacific Northwest.After closing,the new
Avista will be governed by a nine member Board of Directors,with Scott Morris serving as the
Chairman of the Board.Applicants estimate that the total annual cost savings to customers on a
system basis is approximately $1.7 million.The Companies are proposing to flow through a rate
credit of $31.5 million over a 1 0-year period.
YOU ARE FURTHER NOTIFIED the Commission has jurisdiction over this matter
pursuant to Idaho Code §61-328.Section 61-328 prohibits Hydro One from acquiring Avista
without the written authorization of this Commission.Before authorizing such a transaction,the
Commission must find that:(1)the transaction is consistent with the public interest:(2)the
transaction will not cause the cost of rates for supplying electricity to increase;and (3)that
Hydro One has the intent and financial ability to operate and maintain Avista’s operations in
Idaho.More,the Commission may attach conditions to its authorization,and enter any final
Order consistent with its authority under Title 61,Idaho Code.
YOU ARE FURTHER NOTIFIED that the Application and supporting workpapers,
testimonies and exhibits have been filed with the Commission and are available for public
inspection during regular business hours at the Commission offices.The Application and
testimonies are also available on the Commission’s web site at www.puc.idaho.gov.Click on the
“File Room”tab at the top of the page,scroll down to “Open Electric Cases”or “Open Gas
Cases,”and then click on the case number as shown on the front of this document.
YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held
pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and specifically
Idaho Code §61-501,61-502,61-507,61-520,61,523,and 61-622.The Commission may
enter any final Order consistent with its authority under Title 61.
NOTICE OF INTERVENTION DEADLINE
YOU ARE FURTHER NOTIFIED that persons desiring to intervene in this matter
for the purpose of presenting evidence or cross-examining witnesses at hearing must file a
Petition to Intervene with the Commission pursuant to this Commission’s Rules of Procedure
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72 and 73,IDAPA 31.01.01.072 and -.073.Persons intending to participate at the hearing must
file a Petition to Intervene no later than twenty-one (21)days from the service date of this
Order.Persons desiring to present their views without parties’rights of participation and cross-
examination are not required to intervene and may present their comments without prior
notification to the Commission or the parties.
YOU ARE FURTHER NOTIFIED that the Commission Secretary shall issue a
Notice of Parties after the deadline for intervention has passed.The Notice of Parties shall
assign exhibit numbers to each party in this proceeding.
YOU ARE FURTHER NOTIFIED that once the Notice of Parties is issued,
Commission Staff will convene an informal prehearing conference at the Commission’s offices
for the parties to discuss a schedule to process this case and other issues as may be raised by the
parties.
YOU ARE FURTHER NOTIFIED that the following persons are designated as
Avista’s representatives in this matter:
David J.Meyer
Vice President &Chief Counsel,Reg.&Gov’t Affairs
Avista Corporation
P0 Box 3727
1411 East Mission Avenue
Spokane,WA 99220-3 727
E-mail:david.meyer4ãavistacorp.com
Patrick Ehrbar
Director of Rates —State &Federal Regulation
Avista Utilities
P0 Box 3727
1411 East Mission Avenue
Spokane,WA 99220-3 727
E-mail:[e-mail]
YOU ARE FURTHER NOTIFIED that the following persons are designated as
Hydro One’s representatives in this matter:
Elizabeth Thomas,Partner
Kari Vander Stoep,Partner
K&L Gates LLP
925 Fourth Avenue,Suite 2900
Seattle,WA 98104-1158
E-mail:liz.thomas(k1gates.com
E-mail:kari ,vanderstoep(,klgates.corn
NOTICE OF APPLICATION
NOTICE OF INTERVENTION DEADLINE
ORDERO.33903 4
James Scarlett
Executive Vice President &Chief Legal Officer
Hvdro One
483 Bay Street,8th Floor,South Tower
Toronto,Ontario,M5G 2P5
E-mail:j scarlettHvdroOne.com
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in
this matter will be held in facilities meeting the accessibility requirements of the Americans with
Disabilities Act (ADA).Persons needing the help of a sign language interpreter or other
assistance in order to participate in or to understand testimony and argument at a public hearing
may ask the Commission to provide a sign language interpreter or other assistance at the hearing.
The request for assistance must be received at least five (5)working days before the hearing by
contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
P0 BOX 83720
BOISE,IDAHO 83720-0074
[phone] (Telephone)
[phone] (FAX)
E-mail:secretary(puc.idaho.gov
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be
conducted pursuant to the Commission’s Rules of Procedure,IDAPA 31.01 .01.000 et seq.
ORDER
IT IS HEREBY ORDERED that persons desiring to intervene in this matter for the
purpose of presenting evidence or cross-examination at hearing shall file a Petition to Intervene
with the Commission no later than 21 days from the service date of this Order.
IT IS FURTHER ORDERED that discovery is available in these consolidated cases
pursuant to the Commission’s Rules of Procedure,IDAPA 31.01.01.221-234.
NOTICE OF APPLICATION
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ORDER NO,33903 5
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of October 2017
4’!PAUL KJELLAN ,PRESIDENT
4KRNE RAPER,COMMISSIONER
ERIC ANDERSON,COMMISSIONER
ATTEST:
Diane Hanian
Commission Secretary
I Legal LORDERSVUEI7O9 AVUGI7O5 bk(orderl)doc
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