Spokane, WA-based Avista Corp. eventually could look for another merger or acquisition for its five-state utility holding company, following the failure of a $5.3 billion acquisition by Hydro One Ltd. earlier this year, CEO Scott Morris said Friday.
During a conference call with analysts, Morris would not rule out looking for another opportunity, openly lamenting the fact that state regulators had balked at what he considered a sweet deal for utility customers and shareholders alike. He said it was hurt more by politics than economics.
Avista is to receive $110 million in exit fees from Hydro One and avoided additional costs that it would have paid if the deal had not been rejected by Washington and Idaho regulators.
“We not only got tremendous value for our shareholders, we got tremendous value for our customers and our utilities” from the aborted deal, Morris said. “Operating in five states, it is extremely challenging to get anything accomplished in all of them, even when we had unprecedented safeguards and value.
“But we will continue to work real hard on our strategy; we like our future, and we will continue to stay focused on what we need to do to move this company forward.”
Since it was Canadian political issues — not economics — that caused the Hydro One deal to fall through, Morris was asked if he is still looking for another partner.
“I don’t want to speculate, because we need to stay focused on what we need to do to get this company back on track from a regulatory lag perspective,” he said. Avista suspended rate proceedings in mid-2017 when the Hydro One deal was announced in mid-2017. “We operate in five states, each with very different political agendas right now, particularly from an energy perspective.
Ontario owns a minority stake in the Canada-based, a quasi-private utility.
“There is a lot going on, not just from a regulatory perspective, but from an environmental perspective, and community expectations. All of that has to be added into anything that we do. It is a challenging environment no matter what we do with the diverse ideas and perspectives of our stakeholders.”
Avista is looking at annual earnings growth of 9-10% through 2023, even without a merger. New investment opportunities include utility automation and innovation programs “and some other things that we have our engineering teams working on. There are some interesting things out there in the marketplace, and we will continue to investigate all of them.”
For 4Q2018, Avista reported earnings of $45.8 million (70 cents/share), compared with $27.5 million (42 cents) in 4Q2017. For 2018, earnings were $136.4 million ($2.07), compared with $115.9 million ($1.79) in 2017.
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