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Brown says Hydro One blockbuster deal to buy Avista a result of gouging taxpayers (UPDATED)

Ontario PC leader Patrick Brown is calling the purchase of Avista by Hydro One a direct result of Kathleen Wynne’s fire sale. "Hydro One is gouging ratepayers while using our money to buy up foreign companies.
Hydro One makes debut on the Toronto Stock Exchange in biggest IPO in 15 years

Ontario PC leader Patrick Brown is calling the purchase of Avista by Hydro One a direct result of Kathleen Wynne’s fire sale.

"Hydro One is gouging ratepayers while using our money to buy up foreign companies. In the end, Ontario families will be left paying even more for hydro," said Brown in a news release.

Hydro One Ltd. has signed a friendly deal to acquire U.S. energy company Avista Corp. for C$6.7 billion in an all-cash deal that would create one of the largest regulated utilities in North America. The Toronto-based company said Wednesday after the close of markets that it will pay C$67 per share in cash for the U.S. firm.

“Hydro One is currently applying to increase rates on consumers by $141 per year," said Brown. "Why should Ontario families be left with even higher bills when Hydro One has almost $7 billion to throw at foreign companies? This is not fair to Ontario ratepayers. Hydro One’s application for a massive, unaffordable rate increase should be immediately rejected.

“Hydro One’s customer service is already insufficient. Now they will be focusing their attention on American customers instead of helping out Ontario families in need of support and relief. Our province is home to some of the highest rates in North America, and Washington is home to some of the lowest."

Nipissing MPP Vic Fedeli expressed his outrage at a press event today at the North Bay Indian Friendship Centre.  

"Here they are applying in Ontario for a rate increase yet they are going to spend almost $7 billion in the States," said Fedeli. 

"Obviously, this Hydro file has been bungled by Kathleen Wynne and the Liberals so much so that their priorities are right out of whack for them to think it’s more important to invest $7 billion in an American owned utility rather than taking care of the families in need right here in Ontario."

Hydro One CEO Mayo Schmidt disagrees and said during a press conference, Hydro One will be a more valuable company because of the transaction.

"This is really a proud moment for Canadians as we grow our business to become a North American leader," said Schmidt.

"This merger agreement allows for more robust expansion into new lines of business and into new jurisdictions, including the Pacific Northwest, which is experiencing customer growth," he said.

The companies said there will be no job losses as a result of the merger and customer rates will not be affected by any of the costs associated with the transaction.

In November 2015, Hydro One went public with much fanfare, raising $1.83 billion in one of the biggest and most politically charged initial public offerings in Canada. The partial sale of the utility was part of the Ontario government's plan to raise money to fund transit and infrastructure projects.

As the single largest shareholder in Hydro One, the provincial government stands to benefit from the acquisition, which is poised to reap returns beginning in 2019, provincial Energy Minister Glenn Thibeault said.

"It is expected to deliver clear benefits for the company’s customers, employees and shareholders — including the people of Ontario," Thibeault said in a statement.

Meanwhile, Ontario NDP energy critic Peter Tabuns argued the move to create a "huge multinational utility" would mean less control over the province’s electricity system and more financial risk for Ontarians.

"It also raises real concerns about job security for Ontarians," Tabuns said in a statement. "It’s clear that the new Hydro One’s first responsibility is to its international shareholders, not to the people of Ontario."

But Energy Minister Glen Thibeault disagrees.

In an email to BayToday he said, "Hydro One is financing their acquisition of Avista with tools completely separate from their ratepayers. The company is using two methods to pay for this acquisition: an issuance of shares, and taking on new debt that will be paid back through the new revenue received from Avista. This revenue will also benefit all Ontarians, as our government remains the largest shareholder in Hydro One."

Neither of these tools to fund this acquisition affect the ratebase, and as Hydro One has made clear, Ontario rates will be completely unaffected by the company’s new acquisition.

Hydro One has more than 1.3 million customers, $25 billion in assets and employs 5,500 people. Avista provides electric and natural gas services to 721,000 customers.

With files from The Canadian Press


Jeff Turl

About the Author: Jeff Turl

Jeff is a veteran of the news biz. He's spent a lengthy career in TV, radio, print and online, covering both news and sports. He enjoys free time riding motorcycles and spoiling grandchildren.
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