Ontario Premier Doug Ford insists he’s not to blame for Washington regulators’ decision to shoot down Avista’s sale to Hydro One Ltd., which will cost the Toronto utility millions of dollars in termination fees.
In an unrepentant statement issued Thursday, Ford said he carried out campaign promises to change the leadership at the Ontario utility and bring down electric rates for Hydro One customers.
“While some critics might believe that the concerns of Ontario families, seniors, and businesses should take a back seat to foreign regulators, our government remains unwavering in our commitment to the people of Ontario to reduce hydro rates and provide a reliable energy system,” Ford said.
Within days of being sworn into office, Ford’s government asked for the resignation of Hydro One’s board of directors and the retirement of CEO Mayo Schmidt. The province is Hydro One’s largest shareholder, with a 47 percent ownership stake.
The July 11 action caused substantial harm to both Avista and Hydro One, the Washington Utilities and Transportation Commission wrote in its Wednesday denial of the sale.
Avista’s shares dropped 4.5 percent in price after news of the ouster broke, and Hydro One’s shares dropped 8 percent.
With that kind of political meddling and financial risk, Washington commissioners said the $5.3 billion deal was too risky to approve.
“The province’s careless disregard for the harm done by taking politically motivated action to remove the Hydro One board and CEO is illustrated powerfully by the fact that the value of the province’s own Hydro One shares dropped by hundreds of millions of dollars,” the Washington commissioners wrote in their Wednesday decision.
Hydro One will be required to pay Avista
$103 million in termination fees if the sale fails for lack of regulatory approval, according to analysts.
Avista and Hydro One are considering their options, the companies said in a statement. Two financial analysts, however, said the deal is effectively dead.
Jeremy Rosenfield of iA Securities said an appeal of Washington regulators’ decision would be unproductive. “We expect the proposed transaction to quickly unravel,” he wrote in a research note. An analyst for Guggenheim Partners said he expected Idaho to be the “Achilles heal of the transaction,” because the opposition has been vocal and included concerns from the Idaho Public Utilities Commission’s staff. Instead, Shahriar Pourreza wrote, Washington regulators “seemingly put the nail in the coffin” for the sale.
Financial markets also reacted like the deal was dead, with Avista’s stock going back to premerger-announcement prices.
Avista’s stock immediately fell nearly 14 percent in trading Thursday morning when the New York Stock Exchange opened. By 6:45 a.m., Avista’s stock price was $43.97, down 14.5 percent. That’s down from $51.50 at end of Tuesday, the last day the markets were open.
Trading has been heavy with 7.7 million shares changing hands – about 10 times the average volume.
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