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Washington State regulators rejected Hydro One’s Avista takeover

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TORONTO — Washington State regulators have denied Hydro One Ltd.’s proposed takeover of Avista Corp., citing political interference in the Ontario utility by the provincial government.
The Washington Utilities and Transportation Commission sa…


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  • TORONTO — Washington State regulators have denied Hydro One Ltd.’s proposed takeover of Avista Corp., citing political interference in the Ontario utility by the provincial government.

    The Washington Utilities and Transportation Commission said it found the deal, which valued Avista at $6.7-billion, was not in the public interest after it became clear that the Ontario government was willing to interfere in the utility.

    The U.S. regulator cited Premier Doug Ford’s move to force the Hydro One CEO to retire, which was followed by the resignation of the entire board, as evidence that the province was willing to put political interests above those of shareholders, including those that own a majority of the Ontario utility’s stock.

    Hydro One’s 14-member board resigned en masse after the sudden retirement of chief executive officer Mayo Schmidt, who Ford had labelled “the six-million-dollar man” for his hefty compensation.

    “Provincial government interference in Hydro One’s affairs, the risk of which has been shown by events to be significant, could result in direct or indirect harm to Avista if it were acquired by Hydro One, as proposed,” it stated in its decision.

    “This, in turn, could diminish Avista’s ability to continue providing safe and reliable electrical and natural gas service to its customers in Washington. Avista’s customers would be no better off with this transaction than they would be without it.”

    The regulator said the Ontario government’s action resulted in credit downgrades and decreased the value of Hydro One and Avista shares.

    “The province subsequently passed a law limiting the compensation of the company’s executives and providing for ongoing involvement by the province in matters typically reserved to executive management and the board of a private company,” it added.

    The premier made it clear that he wanted changes, including reduced electricity rates and lower compensation for the CEO — even though 92 per cent of shareholders other than the province supported Hydro One’s executive compensation approach.

    The Washington regulator’s decision was anticipated by a series of analysts, who said in July that the heightened potential for political interference could prompt U.S. regulators to hesitate about the takeover.

    Avista and Hydro One filed a joint application with the commission in September 2017 to approve the proposed merger agreement.

    Avista would have become a wholly owned subsidiary of Ontario’s Toronto-based electric transmission and distribution utility while Avista would have maintained its corporate headquarters in Spokane and continued to operate under the same name, management team and employee structure.

    Hydro One, which is 47 per cent owned by the Ontario government, had assured in testimony on the Avista deal that the province was a passive investor that would not exert political pressure on the company.

    However, the Washington regulator pointed to the June 2018 provincial election that swept the Progressive Conservatives to power and the subsequent changes at Hydro One’s board and CEO. The commission extended its decision timeline to further investigate while regulatory approval processes in Idaho and Oregon also were disrupted.

    The U.S. regulator said the promised benefits of the deal, including rate credits, are inadequate to compensate for risks Avista customers would face. More than 80 per cent of public comments received by the regulator opposed the transaction.

    Schmidt, who earned a $6.2-million salary last year, became a lightning rod for resentment during the election over rising electricity rates in the province. He would have been entitled to at least $10.7 million in severance if he were to be removed from his job by the board of directors, according to the company’s annual shareholders report released on March 29.

    Hydro One has said that Schmidt would not be entitled to severance and would instead receive a $400,000 lump sum payment in lieu of all post-retirement benefits. But he still stands to earn millions from deferred stock options.

    Hydro One was partially privatized in November 2015, and by December 2017 the province had sold off 53 per cent of its stake.

    The former Liberal government said privatization would raise $9 billion to fund transit and infrastructure projects. Privatization was also aimed at driving down costs by spinning it off into the hands of private investors.

    Companies in this story: (TSX:H)

    The Canadian Press


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    Bomb hits tourist bus near Egypt’s Giza Pyramids, wounds 17

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    CAIRO — A roadside bomb hit a tourist bus on Sunday near the Giza Pyramids, wounding at least 17 people including tourists, Egyptian officials said.
    The officials said the bus was travelling on a road close to the under-construction Grand Egyptian Muse…


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  • CAIRO — A roadside bomb hit a tourist bus on Sunday near the Giza Pyramids, wounding at least 17 people including tourists, Egyptian officials said.

    The officials said the bus was travelling on a road close to the under-construction Grand Egyptian Museum, which is located adjacent to the Giza Pyramids but is not yet open to tourists.

    The bus was carrying at least 25 people mostly from South Africa, officials added.

    Security forces cordoned off the site of the explosion and the wounded were taken to a nearby hospital, they said.

    They said the explosion damaged a windshield of another car. Footage circulated online shows shattered windows of the bus.

    The officials spoke on condition of anonymity because they weren’t authorized to brief media.

    Egypt has battled Islamic militants for years in the Sinai Peninsula in an insurgency that has occasionally spilled over to the mainland, hitting minority Christians or tourists.

    The attack comes as Egypt’s vital tourism industry is showing signs of recovery after years in the doldrums because of the political turmoil and violence that followed a 2011 uprising that toppled former leader Hosni Mubarak.

    It is the second to target foreign tourists near the famed pyramids in less than six months. In December, a bus carrying 15 Vietnamese tourists was hit by a roadside bomb, killing at least three of them.

    Samy Magdy, The Associated Press


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    Canadian Press NewsAlert: Canadian citizen killed in Honduras plane crash

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    TEGUCIGALPA, Honduras — Global Affairs is confirming that a Canadian citizen has been killed in a plane crash in Honduras.
    A spokesperson for the department says the crash happened in the Roatan Islands area.
    Stefano Maron says consular offic…


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  • TEGUCIGALPA, Honduras — Global Affairs is confirming that a Canadian citizen has been killed in a plane crash in Honduras.

    A spokesperson for the department says the crash happened in the Roatan Islands area.

    Stefano Maron says consular officials in the capital, Tegucigalpa, are in contact with local authorities and providing consular assistance to the victim’s family.

    Local media report that all five people who died in yesterday’s crash were foreigners.

    More coming.

    The Canadian Press


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