20190103final_order_no_34226.pdf

Office of the Secretary
Service Date
January 3,2019
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
APPLICATION OF HYDRO ONE LIMITED
AND AVISTA CORPORATION FOR
APPROVAL OF MERGER AGREEMENT
CASE NOS. AVU.E,17.O9
AVU-G-17-05
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ORDER NO. 34226
On July 19,2017, Avista announced that it had entered into a merger agreement with Hydro
One ("Applicants"). On September 14,2017, the Applicants jointly applied to the Idaho Public
Utilities Commission for an order approving the proposed merger. The Idaho Commission is one
of several regulatory bodies that must approve the proposed merger. If the Idaho Commission and
other state commission and regulatory agencies approve the merger, Avista would become a
wholly owned subsidiary of a Hydro One holding company.
Having carefully reviewed this extensive record, including the Application, Amended
Settlement, testimony, exhibits, briefs, and comments, the Commission now issues this Order
denying the Application, and rejecting the proposed Amended Settlement and merger.
BACKGROUND
On October 5,2017, the Commission issued Notice of the proposal and set an intervention
deadline of October 26,2017 .Idaho Forest Group, Clearwater Paper, Idaho Conservation League
("lCL"), the Community Action Partnership Association of Idaho ("CAPAI"), and the Washington
and Northem Idaho District Council of Laborers intervened as parties (collectively, "initial
intervenors"). Order Nos. 33903, 33914,33916, 33931, md 33932. Several months later, an
unincorporated nonprofit called Avista Customer Group ("ACG"), and the Idaho Department of
Water Resources ("IDWR") were granted late intervention. Order Nos. 34109 and 3411L
The parties met several times for settlement negotiations. On April 13, 2018, the Applicants
and Commission Staff moved for approval of a Stipulation and Settlement between the Applicants,
Commission Staff, and Initial Intervenors. The motion notified the Commission that all parties
(other than ACG and IDWR, which had not yet intervened) had signed a Stipulation and Settlement
("Settlement") that fully resolved the case.
On May 76,2018, the Commission issued notice of the Settlement, and set a June 27,2018,
deadline for interested persons to submit written comments. In June 2018, the Commission held
public hearings in Moscow, Sandpoint, and Coeur d'Alene for Avista customers and other
1ORDER NO.34226
interested persons to testify. The Commission also scheduled a July 23,2018, technical hearing.
See Order Nos. 33950, 34061, and 34101. The Applicants, Commission Staff, CAPAI, and ICL
filed comments in support of the Settlement.
On June 7,2078, elections in the Province of Ontario, Canada, resulted in new leadership
in the Province. The new leadership quickly fulfilled a campaign promise and, on July I 1,2018,
prompted the resignation of Hydro One's Chief Executive Officer ("CEO") and the entire Board
of Directors. Avista reported these actions to the Commission one week later, on July 18, 2018.
Following Avista's report, the Commission vacated the technical hearing, citing "the number of
questions raised by the resignations," as the basis for postponing the technical hearing. See Order
No. 341 1 l. The technical hearing was ultimately rescheduled for November 26-27,2018.
Before the technical hearing occurred, in August and September 2018, the Applicants,
Commission Staff, Initial Intervenors, ACG, and IDWR engaged in settlement discussions. These
discussions resulted in additional terms to the Settlement. See First Amendment to Stipulation and
Settlement, filed November 16, 2018 ("Amended Settlement"). Applicants, Staff, and the Initial
Intervenors signed the Amended Settlement. Additionally, the Applicants, Staff, and intervenor
CAPAI filed testimony supporting the Amended Settlement, and none of the Initial Intervenors
opposed it. ACG, on the other hand, strongly opposed the Amended Settlement. See ACG's
November 21,2018 Response in Opposition to Motion to Admit and Approve First Amendment
to Stipulation and Settlement, and supporting Affidavit of Norman M. Semanko. The final
remaining party,IDWR, notified the Commission it had reached a separate agreement with Avista
concerning Avista's water rights. With that separate agreement related to Avista's water rights,
IDWR expressed no concern about the merger. See August 10, 2018 Notice to Commission from
IDWR Director Gary Spackman, and November 6,2018 Direct Testimony of Shelley Keen.
The Commission ultimately scheduled and held a technical hearing at the Commission's
office in Boise, Idaho on November 26-27,2018. See Order Nos. 34148 and 34179. The
Commission heard testimony from fifteen witnesses and reviewed numerous exhibits resulting in
four volumes and over twelve-hundred pages of hearing transcripts. Additionally, the Applicants,
Staff, and ACG filed post-hearing legal briefs regarding the applicability of Idaho Code S 6l-327,
a statute that prohibits the transfer of electric utility property in certain situations. Finally, the
Commission received approximately 650 written comments from customers and other interested
persons, most of whom opposed the merger.
oRDER NO.34226 2
THE APPLICATION
Avista is an investor-owned Washington Corporation and public utility engaged in the
production, transmission, and distribution of electric power and distribution of natural gas to
customers in eastern Washington, northern Idaho, and parts of southern and eastern Oregon. Avista
serves approximately 378,000 electric customers in Washington, Idaho, and Montana, and
approximately 342,000 natural gas customers in Washington, Idaho, and Oregon. Alaska Energy
and Resources Company, an Avista subsidiary, provides retail electric service in the city and
borough of Juneau through its subsidiary Alaska Electric Light and Power Company.
Hydro One was a Crown Corporation owned by the Province of Ontario, until November
2015, when it was partially privatized. It is now an investor-owned electric transmission and
distribution utility headquartered in Toronto, Ontario, Canada. The Province continues to own 47
percent of the outstanding shares. Under provincial law and Hydro One's Articles of Incorporation,
no other shareholder can own more than 10 percent of the common shares. Beyond the status of
largest shareholder, the Province also maintains a unique governance agreement with Hydro One.
Practically speaking, no one other than the Province can have a substantial influence on corporate
affairs.
As previously noted, in July 2018 the Province prompted the resignation of the Hydro One
Board and CEO. On August 14,2018, Hydro One announced its new ten-member Board of
Directors, four of whom were selected by the Province. Hydro One named an acting CEO, but has
yet to announce a new permanent CEO. However, the Province will play a direct role in the CEO's
compensation package, and recent news reports indicate that the Province is also playing a role in
selecting candidates.
As proposed, Avista would be acquired by Hydro One through an Idaho holding company,
Olympus Equity LLC, which would acquire all of the outstanding common stock of Avista. Avista
would become a wholly owned subsidiary of Olympus Equity LLC. Olympus Equity would be a
bankruptcy remote entityl in place purely to own Avista and relay Avista dividends to Hydro One.
To accomplish the merger, Avista and Hydro One require approvals from the state
regulatory commissions in Idaho, Oregon, Montana, Alaska, and Washington. Alaska approved
the proposed merger on June 4,2018. Montana approved the proposed merger on July 10, 2018.
t 4 bankruptcy renlote entity is a special entity formed to hold a defined asset and to protect that asset from
being administered as property of a bankruptcy estate.
ORDER NO.34226 aJ
Washington denied the merger application on December 5,2018. The Applicants requested
reconsideration in Washington on December 17 ,2018.
In addition to state regulatory approval, the Applicants must also obtain approval from
several federal entities. The Federal Energy Regulatory Commission approved the proposed
transaction on January 16,2018. The 3O-day waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 expired on April 5, 2018, meaning that the parties have received
antitrust clearance for the proposed merger. Hydro One and Avista received the Federal
Communications Commission's consent on May 4,2018. The Committee on Foreign Investment
in the United States completed its review of the proposed merger on May 18,2018, and raised no
national security concerns about the transaction.
PUBLIC COMMENTS
In recognition of the importance of this case and the public interest expressed, the
Commission held three public hearings in northern Idaho and accepted testimony and comments
from hundreds of members of the public. Almost everyone who testified or commented opposed
the merger. Given the number of people who testified and commented, and the broad scope of their
testimonies and comments, it is impractical for us to enumerate every concern or thought
expressed. However, the general nature of the public testimony and comments expressed concern
over foreign ownership, foreign government control of the company, increased rates, and negative
service quality impacts.
THE AMENDED SETTLEMENT
The Amended Settlement proposes the Commission approve the merger, and incorporates
Company commitments, rate commitments, regulatory commitments, resource-planning
commitments, spending commitments, and ring fencing provisions aimed at protecting and
benefiting Avista customers. By way of summary,2 the Amended Settlement states:
. All decision-making authority over Avista operations would belong to the Avista Board of
Directors. The Board would consist of nine members, the majority of which would be
designated by Hydro One, with certain conditions regarding independence of some
appointments.
2 This summary highlights provisions of the Amended Settlement. The Commission fully reviewed the entire
Amended Settlement, and the summary of some of its terms does not imply others were of less importance. The full
terms of the Amended Settlement can be viewed at the Commissions website: https://www.puc.idaho.gov/
4ORDER NO.34226
o Avista would maintain its Spokane offices, workforce, compensation, and branding.
o There would be no rate increase because of the merger. Rather, Avista's Idaho customers
would receive a $15.8 million rate credit over a five-year period, or $3.2 million per year.
o Hydro One and its subsidiaries recognize the authority of Idaho, and the Idaho
Commission, and have committed to comply, as required, with Idaho laws and Commission
orders.
o Hydro One and Avista would maintain independent finances.
o Several ring fencing provisions were included in an effort to shield Avista from Hydro One
liabilities, including bankruptcy proceedings. Other ring fencing provisions include a "hold
harmless" provision, under which Hydro One would hold Avista's customers financially
harmless from any business, financial, or environmental risks attributable to Hydro One,
and a provision to protect Avista's assets.
o Going forward, in all resource planning, Avista would evaluate demand-side resources,
renewable energy, and Purchase Power Agreements consistent with Commission resource
evaluation rules and policies.
. Hydro One agreed to fund $5.3 million for energy efficiency, weatherization, conservation,
and low-income assistance programs over ten years. A newly created "Energy Efficiency,
Weatherization, Conservation and Low-Income Assistance Committee" would direct the
funds, and would consist of interested stakeholders.
o Hydro One would fund a one-time $7 million contribution to Avista's charitable
foundation. For five-years after the close of the transaction, Avista would maintain a $4
million annual budget for charitable contributions, and would contribute $2 million each
year to Avista's charitable foundation.
o For accounting pu{poses, Hydro One and Avista would support a December 31,2027,
depreciation end of life relating to Avista's ownership in Colstrip Units 3 and 4.
o The parties also agreed to the subordination of certain water rights.
FINDINGS AND DISCUSSION
Avista is an electric utility subject to the Commission's regulation under the Public Utilities
Law. Idaho Code $$ 61-119 and 6l-129. The Company's rates, charges, classifications and
contracts for electric service in the State of Idaho are subject to the Commission's jurisdiction. This
5ORDER NO.34226
Commission has jurisdiction over this matter pursuant to the provisions of ldaho Code $$ 6l-327
and -328.
Rules 271-277 of the Idaho Public Utilities Commission Rules of Procedure (IDAPA
31.01.01 .271-277) describe the Commission's process fbr considering a settlement stipulation.
When a settlement is presented, the Commission prescribes the procedures by which the
Commission will consider it. In this case, the Commission received hundreds of comments.
convened several public hearings, and held a technical hearing. IDAPA 31.01.01.274. Proponents
of a proposed settlement must show the settlement is reasonable, in the public interest, or otherwise
in accordance with law or regulatory policy. IDAPA 3 1 .01 .01 .27 5. The Commission is not bound
by settlement agreements. Rather, the Commission "will independently review any settlement
proposed to it." IDAPA 31.01.01.276.
In deciding whether the Amended Settlement is just, fair, reasonable, and in the public
interest as required by Rules 274 and275, o:ur inquiry is guided, and constrained, by Idaho Code
$$ 6l-327 ,328. These statutes limit an electric utility's ability to sell assets in certain situations.
Section 6l-327 prohibits a utility from transferring assets to certain entities. lf 5 6l-327 does not
bar the transaction, then the Commission can only approve the transaction if it finds that the
transaction passes the public interest and no-harm tests set forth in $ 6l-328. In this case, we find
the Applicants have failed to carry their burden under Idaho Code $ 6l-327.
A. OVERVTEW OF rDAHO CODE $ 61-327.
Idaho Code $ 6l-32l provides:
6l-327, Electric Utility Propertv - Acquisition bv Certain Public Agencies
Prohibited. No title to or interest in any public utility (as such term is defined
in chapter 1, title 6l,Idaho Code) property located in this state which is used in
the generation, transmission, distribution or supply of electric power and energy
to the public or any portion thereof, shall be transferred or transferable to, or
acquired by, directly or indirectly, by any means or device whatsoever, any
government or municipal corporation, quasi-municipal corporation, or
governmental or political unit, subdivision or corporation, organized or existing
under the laws of any other state; or any person, firm, association, corporation
or organization acting as trustee, nominee, agent or representative for, or in
concert or arrangement with, any such government or municipal corporation,
quasi-municipal corporation, or governmental or political unit, subdivision or
corporation; or any company, association, organization or corporation,
organized or existing under the laws of this state or any other state, whose issued
capital stock, or other evidence of ownership, membership or other interest
therein, or in the property thereof, is owned or controlled, directly or indirectly,
6ORDER NO.34226
by any such government or municipal corporation, quasi-municipal corporation,
or governmental or political unit, subdivision or corporation; or any company,
association, organization or corporation, organized under the laws of any other
state, not coming under or within the definition of an electric public utility or
electrical corporation as contained in chapter l, title 6l,ldaho Code, and subject
to the jurisdiction, regulation and control of the public utilities commission of
the state of Idaho under the public utilities law of this state; provided, nothing
herein shall prohibit the transfer of any such property by a public utility to a
cooperative electrical corporation organized under the laws of another state,
which has among its members mutual nonprofit or cooperative electrical
corporations organized under the laws of the state of Idaho and doing business
in this state, if such public utility has obtained authorization from the public
utilities commission of the state of Idaho pursuant to section 6l-328, Idaho
Code.
In summary, $ 6l-327 bars the transfer of generation, transmission, or distribution and supply
assets of Idaho regulated utilities to certain deflned entities. Specifically, 5 61-327 prohibits
a utility from transferring assets to four kinds of transferees: 1) A "government... orpolitical
unit existing under the laws of any other state;" 2) "any organization acting as ... representative
for, or in concert ... with, any such government ...;" 3) "any company ... whose issued capital
stock, or other evidence of ownership ... is owned or controlled, directly or indirectly, by any ...
governmental or political unit;" and 4) "any ... organization or corporation organized under the
laws of any other state, not coming within the definition of an electric public utility or electrical
corporation. . .."
Because this statute pertains to the sale or transfer of ownership interest in electric facilities
in Idaho, it applies to the merger in this case.
In interpreting this statute, we are guided by Idaho Code $ 73-113, which states:
l) The language of a statute should be given its plain. usual and ordinary meaning.
Where a statute is clear and unambiguous, the expressed intent of the legislature
shall be given effect without engaging in statutory construction. The literal
words of a statute are the best guide to determining legislative intent.
2) If a statute is capable of more than one (l) conflicting construction, the
reasonableness of the proposed interpretations shall be considered, and the
statute must be construed as a whole. Interpretations which would render the
statute a nullity, or which would lead to absurd results, are disfavored.
3) Words and phrases are construed according to the context and the approved
usage ofthe language, but technical words and phrases, and such others as have
acqr-rired a peculiar and appropriate meaning in law, or are defined in the
,7ORDER NO.34226
sLlcceeding section, are to be construed according to such peculiar and
appropriate meaning or definition.
B. THE PROPOSED TRANSFER
As an initial matter, ldaho Code $ 6l-327 is triggered because Avista proposes to transfer
an interest in its Idaho-based generation, transmission, and distribution property. The Applicants
proposal to transfer all Avista stock to a Hydro One entity is a de facto transfer of Avista and its
assets. In this case, the Applicants propose to transfer full ownership of Avista-a public utility
that owns Idaho-based generation, transmission, or distribution property-to a Hydro One entity.
Hydro One will become the sole shareholder of Avista and Avista's interest in its property would
persist only as a Hydro One subsidiary.
The threshold question this Commission must answer is whether Avista is transferring its
assets to a transferee prohibited under S 61-327. This Commission's statutory duty to consider
whether the proposed merger would be just, fair, reasonable, in the public interest and otherwise
in accordance with Idaho law and regulatory policy demands that we address the documented,
contractual and ongoing control that the Province of Ontario exerts over Hydro One. We cannot
approve the proposal if Avista's transfer to Hydro One amounts to a transfer to "any organization
acting as ... representative for, or in concert ... with, any such government ...;" or "any company
... whose issued capital stock, or other evidence of ownership . .. is owned or controlled, directly
or indirectly, by any ... govemmental or political unit." Id.
As explained in greater detail below, we find $ 6l-327 bars the transaction because Hydro
One is a prohibited transferee.
1. Hydro One is directly and indirectly subject to the control and ownership interest of the
Province of Ontario.
Hydro One was a Crown Corporation wholly owned by the Province until November 2015.
As previously stated, the Province remains its largest shareholder----owning 47 percent of the
outstanding shares. Pursuant to provincial law and Hydro One's Articles of Incorporation, no other
shareholder may own any more than ten percent of the outstanding shares. These provisions
operate to ensure that no other single shareholder can secure a significant or controlling influence
in Hydro One greater than the Province. Moreover, the 2015 governance agreement and the 2018
letter agreement between Hydro One and the Province spell out how Hydro One will be governed,
including the special role the provincial government serves over Hydro One. The Applicants
ORDER NO. 34226 8
asserted through testimony and briefing that the Province is merely a shareholder, and not a
manager of Hydro One. However, the events that began in June 201 8 and continue to present day,
prove otherwise.
Prior to June 2018, Hydro One's then CEO, Mayo Schmidt, declared that the governance
agreement would "ensure that Hydro One's business and operations are completely independent
from the govemment of the Province of Ontario." Tr. 563-64. Contrary to all assertions made by
both Hydro One and Avista to this Commission, in June 2018 the Province caused the resignation
of the entire Hydro One Board of Directors and the removal of the Mr. Schmidt. These events
caused a downgrade in Hydro One's credit rating and significant delays and cost increases in the
regulatory proceedings surrounding this merger. Further, the Province executed management-level
control by altering the structure of the Board, modifying contractual compensation packages, and
participating in additional oversight ordinarily reserved to the Board of Directors and other
executive officers. Tr.193. The Premier continues to promise publicly a 12 percent reduction in
rates to Hydro One's consumers . Tr. 335-337 .
We find that the language of the controlling statute, when given its plain, usual and ordinary
meaning is clear and leads us to the conclusion that Hydro One is both indirectly and directly
controlled by the ownership interest of and deference to the Province of Ontario. Merriam-Webster
defines "in concert" as an "agreement in design or plan," and "arrangement" as "an inlormal
agreement or settlement especially on personal, social, or political matters." The Merriarn-
Webster Dictionary (New Edition 2016). "Control" amounts to "the direct and indir:ect power
to govern the managernent and policies of'a person or entity. whether thlough ownership of
voting securities. by contract, or by otherwise: the power or authority to manage, direct. or
oversee." Black's Law Dictionary (1Oth ed. 2014). Hydro One is a party to both a governance
agreement and a letter agreement with the Province. The Applicants testilled that these
agreements protect l{ydro One's independence. Flow'ever. I{ydro One Board members
disregarded provisions of the governance agreement intended to protect the utility's
sharelrolders r{ren they stepped down under political pressure. Tr.791-793.
It is beyond dispute that the Province's control ol'Hydro One also led to a restructuring
of the Board of Directors. from fburteen to ten Board members, and removal and yet-to-occur
replacement o1'the CEO. Additionally, the retention of the Hydro One CEO requires a two-thirds
percent vote of the Board. Tr. 58-59. Because the Province of Ontario controls the appointment of
9oRDER NO.34226
40 percent of the Board, Provincial appointees can replace the CEO annually. SeeTr. 15. This
further evidences the control and influence the Province has over the Company at any given time.
Further. the Premier of the provincial government has publicly declared that Hydro One is not
a private corporatiorr. Tr. 800-802.
We recognize that the parties have proposed significant ring fencing to protect Avista's
property and its customers. However, no provision can change Hydro One's status as Avista's
proposed owner or the authority imposed on Hydro One by the Province of Ontario. Even the
newly seated Chair o1'the Board ol'Directors, Thomas Woods, adrnitted the governance
agreement does not prevent the Province fiom making further attempts to manage Hydro One.
Tr. 110-111.
It is abundantly clear that the Province does not have to own 5 I percent of Hydro One
in order to e{'flectively control the company. Based on the recent events surrounding the
Province's intrusions into Hydro One corporate affhirs, any other conclusion would be
unreasonable and ignorant in light of the uncontested Iacts and evidence. Consequently. we find
that l-lydro One has acted in concert with the Province of Ontario, fbrmally and informally,
directly and indirectly.
2. The provincial govcrnment of Ontario is the government of another state.
While Idaho Code $ 61-327 prohibits a public utility liom transferring an interest in
Idaho-based assets to the government of "any other state," the statute does not define what
ccxstitutes "any other state." A standard dictionary definition of 'ostate" broadly refers to "the
political system of a body of people who are politically organized; a system of rules by which
jurisdiction and authority are exercised over such a body of people." Black's Law Dictionary (lOth
ed.2014). Thus, a plain reading of the statute would naturally include not only other states within
the United States, but also territories, foreign nations, and Canadian provinces. Idaho case law
supports this clear and unambiguous reading. See ldaho Power Co. v. State of ldaho, l04Idaho
575, 589 ("[Section] 327 provides generally that property in this state used in the generation or
transmission of electricity shall not be transferred in any manner to out-of-state organizations,
governmental entities, or ony entity not subject lo regtlation by lhe PUC:.") (emphasis added).
The Applicants defend a much more narrow reading of the statute. The Applicants contend
that "any other state" means "any other state of the United States," and excludes any consideration
of foreign provinces or alien nations. See Tr. at 138-141, and Applicant's Brief at 9-10. We
ORDER NO. 34226 l0
disagree. The Applicants' narrow concept of state would yield the absurd result of prohibiting
purchases by entities owned by other states of-the United States, while allowing such transactions
if the entity is owned by a foreign country. We find that the plain language used by the legislature,
when read in context and given its ordinary meaning, includes foreign entities such as the province
of Ontario within the meaning of "state."
Consequently, we cannot approve the proposed transfer of Avista's assets to Hydro One.
The proposal amounts to a transfer of Idaho-based utility generation, transmission, distribution
and supply assets to an organization acting in concert with, and controlled by, a government of
another state. Hydro One is not purely a private, publicly traded corporation. Rather, the
management of Hydro One is subject to the Province's political pressure, legislative power, and
special governance agreements. The prohibitions of Idaho Code $ 6l-327 cannot be nullified with
generous settlement terms and robust ring-fencing provisions.
We continue to recognize that, "[w]ith the increased globalization of economies and
cultures, the concept of an 'American' company is becoming more obscure. Today's increasingly
competitive markets require businesses to search far and wide for materials, labor, and business
opportunities. Large businesses whose stock is publicly traded in this country are often owned, at
least in part, by foreign interests. Similarly, U.S. corporations and individuals often engage in the
acquisition of or partnership with foreign businesses." Order No. 28213. In this instance, it is
Hydro One's lack of independence from the governmental entity that dictates our decision to reject
the proposed merger between Hydro One and Avista. The burden to establish that the proposal
complies with Idaho law rests with the Applicants. IDAPA 31.01.01 .2l5.We find the Applicants
have failed to establish that the proposed settlement is in accordance with Idaho Code $ 6l-327.
Our decision is supported by substantial and competent evidence compiled through a vigorous and
thorough effort by all parties to present a complete record for our review.
C. Idaho Code $ 61-328
Because we have determined Idaho Code $ 6l-327 is dispositive of the proposed
transaction, we do not decide whether Idaho Code $ 6l-328 might also bar the proposal. Section
6l-328, in summary, precludes the Commission from approving a transaction unless: (a) the
transaction is consistent with the public interest; (b) the transaction will not increase the cost of
and rates for supply service; and (c) the transferee has the bona fide intent and financial ability to
operate and maintain the property in the public service. While we do not base our decision here on
oRDER NO.34226 ll
these public interest standards, it would be reasonable and fair to consider the same and similar
facts that dictated our decision under 5 6l-327. Any evaluation of the public interest would,
undeniably, take into account the provincial politics and circumstances under which Hydro One's
CEO and entire Board of Directors resigned.
This Commission remains concerned about the outer limits of the Province's power over
Hydro One. We are not convinced that the Province shares Hydro One's philosophy that the
Company be independent. We also note that the testimony provided by Hydro One witnesses was
constructed in furtherance of an approved settlement agreement. Attempts to solicit more detail at
hearing about the Province's intrusions on Hydro One management were met with less than
persuasive responses. Furthermore, Hydro One lacks that authority to make commitments that
would bind the Province.
Our decision to reject the proposed transaction and Amended Settlement does not hinge on
these considerations. However, we offer them as a caution to the parties. To be clear, in any
analysis of Idaho Code $ 6l-328, this Commission would strictly scrutinize the facts and evidence,
through additional hearings and testimony if needed, to assess whether the proposed transaction
ultimately could satisfy Idaho Code $ 61-328.
INTERVENOR FUNDING
Intervenor funding is available under Idaho Code $ 6l-617A and Rules 161-165. Idaho
Code $ 61-617 A(l) states it is the "policy of [Idaho] to encourage participation at all stages of all
proceedings before this Commission so that all affected customers receive full and fair
representation in those proceedings." The statute authorizes the Commission to order any regulated
utility with intrastate annual revenues exceeding $3.5 million to pay all or a portion of the costs of
one or more parties. Idaho Code $ 6l-617 A(2).
Intervenor funding costs include legal fees, witness fees, and transportation and other
expenses so long as the total funding for all intervening parties does not exceed $40,000 in any
proceeding. Id. The Commission must consider the following factors when deciding whether to
award intervenor funding :
1) That the participation of the intervenor has materially contributed to the
Commission' s decision;
2)That the costs of intervention are reasonable in amount and would be a
significant financial hardship for the intervenor;
ORDER NO.34226 t2
3)The recommendation made by the intervenor differs materially from the
testimony and exhibits of the Commission Staff; and
4)The testimony and participation of the intervenor addressed issues of
concern to the general body of customers.
Id. To obtain an award of intervenor funding, an intervenor must further comply with Rules 161-
165. IDAPA 31.01.01.161-165. The petition must contain an itemized list of expenses broken
down into categories, a statement explaining why the costs constitute a significant financial
hardship, and a statement showing the class of customer on whose behalf the intervenor
participated. Rule 162; IDAPA 31.01.01.162.
Here, the Commission received three timely intervenor-funding petitions: ACG, for
$24,412.37; CAPAI, for $17,045; and ICL, for $12,950. CAPAI and ICL provided detailed
breakdowns of the time their legal staff spent on the case. ACG summarrzed the work its lawyer
completed.
In considering the requests, the Commission reviewed the Petitions, and the record of
proceedings. Consistent with the policy expressed in Idaho Code $ 61-617A, we encourage
intervenors to participate in cases and decisions before us. Based on their testimony and
participation in this matter, we find that the Petitions for Intervenor Funding filed by ACG,
CAPAI, and ICL generally comport with the procedural and technical requirements set forth in
Rules l6l-165 of the Commission's Rules of Procedure. We thus find that the intervenors have
satisfied the criteria for an intervenor funding award under Idaho Code $ 6l-617 A.
We find that ACG, CAPAI, and ICL all materially contributed to our decision in this matter
by addressing issues important to our consideration. CAPAI and ICL added perspectives from
environmental and low-income groups and represented their respective interests through two
settlement agreements. ACG represented the interest of customers who opposed the merger, and
provided valuable perspective regarding Idaho Code $ 6l-327. We note that the intervenors
participated in scheduled negotiations, prepared and evaluated discovery. However, ACG became
a party to the case nearly four months after CAPAI and ICL began participating. All intervenors
were present and actively participated at the technical hearing. Each intervenor's position
materially differed from the Applicants and Staff evidence and positions. We also find that the
intervenors addressed issues relevant to all consumers, provided us with a more complete
framework in which to evaluate the case and render a decision in the public interest. We further
ORDER NO.34226 13
find that the intervenors would suffer financial hardship without access to some intervenor
funding. CAPAI and ICL provided detailed breakdowns of the time spent on their particular
portion of this case, billing 70 and 74 hours respectively. ACG provided a more generic breakdown
that included 98 hours of attorney time. Notably, CAPAI and ICL participated in this case since
its inception, nearly four months longer than ACG. Accordingly, we feel it is appropriate to adjust
ACG's time. The less than detailed billing provided by ACG makes an adjustment more difficult.
However, we find that a downward adjustment of 24 hours (from 98 hours to 14 hours) is
appropriate considering the time allocations claimed by the other intervenors.
Finally, while we recognizethe value of the contributions ofthe intervenors, we are limited
to a cumulative award of $40,000. Therefore, in the interest of fairness, with acknowledgment of
the substantial value their participation added to the record and our deliberation and ultimate
decision, we find that, after ACG's adjustment, the intervenors contributed to a substantially
similar degree, which leads us to an approximately equal distribution of intervenor funds.
Accordingly, we find it appropriate to grant the Petitions and award intervenor funding as follows:
$15,813.87 to ACG; $13,744.02 to CAPAI; and $10,442.11 to ICL. These awards shall be
chargeable to the residential and small commercial classes. Idaho Code $ 6l-617A(3).
ORDER
IT IS HEREBY ORDERED that the Motion to Admit and Approve First Amendment to
Stipulation and Settlement is denied. The proposed transaction is not in accordance with Idaho
Code $ 6l-321 . Accordingly, the Joint Application for an Order Authorizing Proposed Transaction
is also denied.
IT IS FURTHER ORDERED that the intervenor-funding petitions of the ACG, CAPAI,
and ICL are granted in part. Avista shall promptly pay $15,813.87 to ACG, $13,744.02 to CAPAI,
and $10,442.11to ICL, chargeable to the residential and small commercial classes.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code $ 6l-626.
ORDER NO. 34226 14
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
ofJanuary 2019.
3 ,r/
day
PA
RAPER,ONER
ERIC ANDERSON, COMMISSIONER
A
Diane M. Hanian
Commission Secretary
Al'llE I 709_AVUG I ?05,final_bk
ORDER NO. 34226 l5