trending Market Intelligence /marketintelligence/en/news-insights/trending/6vecakvixogx1rw2txwrga2 content esgSubNav
In This List

Montana approves Hydro One acquisition of Avista Corp.

Podcast

Next in Tech | Episode 49: Carbon reduction in cloud

Blog

Using ESG Analysis to Support a Sustainable Future

Research

US utility commissioners: Who they are and how they impact regulation

Blog

Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Montana approves Hydro One acquisition of Avista Corp.

Montana regulators on June 12 approved the proposed merger of Hydro One Inc. and Avista Corp. after securing several conditions to help ease the impact of the eventual retirement of the coal-fired Colstrip power plant.

Though Avista has only 32 customers in Montana, it has a 15% ownership stake in Colstrip units 3 and 4 as well as some hydroelectric generation assets in the state. The Montana Public Service Commission conditioned its approval of the Canada-headquartered Hydro One's acquisition of Avista to limit the impact of the deal on economics of the Colstrip, Mont., community, including jobs and tax revenues.

Because Avista serves customers in multiple states, the merger also has to get the approval of regulators in Washington, Oregon and Idaho. Alaska regulators on June 4 approved the transaction.

The Montana commissioners expressed concerns about loss of regulatory control with Hydro One acquiring Avista. Hydro One's largest shareholder is the provincial government of Ontario, which holds a 47.4% stake in the parent company, Hydro One Ltd. However, the commissioners voted 4-1 for approval.

Dissenting Commissioner Tony O'Donnell, whose district includes Colstrip, opposed the acquisition, saying, "I didn't hear enough assurance that the Canadian government can't interfere to shorten the length of Colstrip power plant's operational life."

Environmental and clean energy interests have called for closing the plant and settlements were reached with various parties in the affected states to include an accelerated depreciation schedule for Colstrip with an end-of-useful life date set at 2027. While regulators, especially in Oregon and Washington, are sympathetic to the interests of those who want to shut the plant, the commissioners in Montana, a big coal-producing state, were concerned the accelerated depreciation schedule might result in the premature retirement of the Colstrip units.

To preserve their voice on that issue, the Montana commissioners included in their decision a provision to opt out of the 2027 depreciation schedule for the purpose of setting Avista's future rates in Montana, meaning they may choose not set future rates for plant cost recovery based on the accelerated schedule.

As part of the proposed merger, Avista and Hydro One will place $4.5 million into a community fund with the stated goal of helping the city of Colstrip transition into a future without the power plant.

Talen Generation LLC is the Colstrip plant's operator and Puget Sound Energy Inc. owns the largest single share, with partial interests in all four Colstrip units.