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Hydro One Avista takeover rejection signals Washington regulators blocking a utility acquisition over governance risk, EPS dilution, and balance sheet impact, as investors applaud share price gains and a potential US$103M break fee.

Key Points

A regulator-led block of Hydro One's Avista bid, citing EPS dilution, balance sheet risk, and governance concerns.

✅ Washington denies approval; Idaho, Oregon decisions pending.

✅ EPS dilution avoided; balance sheet strength preserved.

✅ Shares rise 5.7%; US$103M break fee if deal collapses.

Opposition politicians may not like it but investors are applauding the rejection of Hydro One Ltd.'s $6.7-billion Avista takeover of U.S.-based utility Avista Corp.

Shares in the power company controlled by the Ontario government, which has also proposed a bill redesign to simplify statements, closed at $21.53, up $1.16 or 5.7 per cent, on the Toronto Stock Exchange on Thursday.

On Wednesday, Washington State regulators said they would not allow Ontario's largest utility to buy Avista over concerns about political risk that the provincial government, which owns 47 per cent of Hydro One's shares, might meddle in Avista's operations.

Financial analysts had predicted investors would welcome the news because the deal, announced in July 2017, would have eroded earnings per share and weakened Hydro One's balance sheet.

"The Washington regulator's denial of Avista is a positive development for the shares, in our opinion," said analyst Ben Pham of BMO Capital Markets in a report on Wednesday.

"While this may sound odd, we note that the Avista deal is expected to be EPS dilutive and result in a weaker balance sheet for (Hydro One). Not acquiring Avista and refocusing its attention on its core Ontario franchise ... along with related interprovincial arrangements such as the Ontario-Quebec electricity deal under discussion would likely be viewed positively if the deal ultimately breaks."

Decisions are yet to come from Idaho and Oregon state regulators, but Washington was probably the most important as the state contains customers making up about 60 per cent of Avista's rate base, Pham said.

He pointed out that a US$103-million break fee is to be paid to Avista if the deal collapses due to a failure to obtain regulatory approval.

CIBC analyst Robert Catellier raised his 12-month Hydro One target price by 25 cents and said many shareholders will feel "relieved" that the deal had failed.

He warned that the company's earnings power could deteriorate as the province seeks to reduce power bills by 12 per cent, despite an Ontario-Quebec hydro deal that may not lower costs.

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Maritime Link HVDC Transmission connects Newfoundland and Nova Scotia to the North American grid, enabling renewable energy imports, subsea cable interconnection, Muskrat Falls hydro power delivery, and lower carbon emissions across Atlantic Canada.

Key Points

A 500 MW HVDC intertie linking Newfoundland and Nova Scotia to deliver Muskrat Falls hydro power.

✅ 500 MW capacity using twin 170 km subsea HVDC cables

✅ Interconnects Newfoundland and Nova Scotia to the North American grid

✅ Enables Muskrat Falls hydro imports, cutting CO2 and costs

For the first time, electricity has been sent between Newfoundland and Nova Scotia through the new Maritime Link.

The 500-megawatt transmission line — which connects Newfoundland to the North American energy grid for the first time and echoes projects like the New England Clean Power Link underway — was tested Friday.

"This changes not only the energy options for Newfoundland and Labrador but also for Nova Scotia and Atlantic Canada," said Rick Janega, the CEO of Emera Newfoundland and Labrador, which owns the link.

"It's an historic event in our eyes, one that transforms the electricity system in our region forever."

'On time and on budget'

It will eventually carry power from the Muskrat Falls hydro project in Labrador, where construction is running two years behind schedule and $4 billion over budget, a context in which the Manitoba Hydro line to Minnesota has also faced delay, to Nova Scotia consumers. It was supposed to start producing power later this year, but the new deadline is 2020 at the earliest.

The project includes two 170-kilometre subsea cables across the Cabot Strait between Cape Ray in southwestern Newfoundland and Point Aconi in Cape Breton.

The two cables, each the width of a two-litre pop bottle, can carry 250 megawatts of high voltage direct current, and rest on the ocean floor at depths up to 470 metres.

This reel of cable arrived in St. John's back in April aboard the Norwegian vessel Nexans Skagerrak, after the first power cable reached Nova Scotia earlier in the project. (Submitted by Emera NL)

The Maritime Link also includes almost 50 kilometres of overland transmission in Nova Scotia and more than 300 kilometres of overland transmission in Newfoundland, paralleling milestones on Site C transmission work in British Columbia.

The link won't go into commercial operation until January 1.

Janega said the $1.6-billion project is on time and on budget.

"We're very pleased to be in a position to be able to say that after seven years of working on this. It's quite an accomplishment," he said.

This Norwegian vessel was used to transport the 5,500 tonne subsea cable. (Submitted by Emera NL)

Once in service, the link will improve electrical interconnections between the Atlantic provinces, aligning with climate adaptation guidance for Canadian utilities.

"For Nova Scotia it will allow it to achieve its 40 per cent renewable energy target in 2020. For Newfoundland it will allow them to shut off the Holyrood generating station, in fact using the Maritime Link in advance of the balance of the project coming into service," Janega said.

Karen Hutt, president and CEO of Nova Scotia Power, which is owned by Emera Inc., calls it a great day for Nova Scotia.

"When it goes into operation in January, the Maritime Link will benefit Nova Scotia Power customers by creating a more stable and secure system, helping reduce carbon emissions, and enabling NSP to purchase power from new sources," Hutt said in a statement.

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DTEK Rotterdam+ price-fixing case scrutinizes alleged collusion over coal-based electricity tariffs in Ukraine, with NABU probing NERC regulators, market manipulation, consumer overpayment, and wholesale pricing tied to imported coal benchmarks.

Key Points

NABU probes alleged DTEK-NERC collusion to inflate coal power tariffs via Rotterdam+; all suspects deny wrongdoing.

✅ NABU alleges tariff manipulation tied to coal import benchmarks.

✅ Four DTEK execs and four NERC officials reportedly charged.

✅ Probe centers on 2016-2017 overpayments; defendants contest.

Two more executives of DTEK, Ukraine’s largest private power and coal producer and recently in energy talks with Octopus Energy, have been charged in a criminal case on August 14 involving an alleged conspiracy to fix electricity prices with the state energy regulator, Interfax reported.

They are Ivan Helyukh, the CEO of subsidiary DTEK Grid, which operates as Ukraine modernizes its network alongside global moves toward a smart electricity grid, and Borys Lisoviy, a top manager of power generation company Skhidenergo, according to Kyiv-based Concorde Capital investment bank.

Ukraine’s Anti-Corruption Bureau (NABU) alleges that now four DTEK managers “pressured” and colluded with four regulators at the National Energy and Utilities Regulatory Commission to manipulate tariffs on electricity generated from coal that forced consumers to overpay, reflecting debates about unjustified profits in the UK, $747 million in 2016-2017.

DTEK allegedly benefited $560 million in the scheme.

All eight suspects are charged with “abuse of office” and deny wrongdoing, similar to findings in a B.C. Hydro regulator report published in Canada.

There is “no legitimate basis for suspicions set out in the investigation,” DTEK said in an August 8 statement.

Suspect Dmytro Vovk, the former head of NERC, dismissed the investigation as a “wild goose chase” on Facebook.

In separate statements over the past week, DTEK said the managers who are charged have prematurely returned from vacation to “fully cooperate” with authorities in order to “help establish the truth.”

A Kyiv court on August 14 set bail at $400,000 for one DTEK manager who wasn’t named, as enforcement actions like the NT Power penalty highlight regulatory consequences.

The so-called Rotterdam+ pricing formula that NABU has been investigating since March 2017, similar to federal scrutiny of TVA rates, was in place from April 2016 until July of this year.

It based the wholesale price of electricity by Ukrainian thermal power plants on coal prices set in the Rotterdam port plus delivery costs to Ukraine.

NABU alleges that at certain times it has not seen documented proof that the purchased coal originated in Rotterdam, insisting that there was no justification for the price hikes, echoing issues around paying for electricity in India in some markets.

Ukraine started facing thermal-coal shortages after fighting between government forces and Russia-backed separatists in the eastern part of the country erupted in April 2014. A vast majority of the anthracite-coal mines on which many Ukrainian plants rely are located on territory controlled by the separatists.

Overnight, Ukraine went from being a net exporter of coal to a net importer and started purchasing coal from as far away as South Africa and Australia.

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Summer Power Grid Reliability and Climate Risk drives urgent planning as extreme heat, peak demand, drought, and aging infrastructure strain ERCOT, NERC regions, risking outages without renewables integration and climate-informed grid modeling.

Key Points

Assessment of how extreme weather and demand stress the US grid, informing climate-smart planning to reduce outages.

✅ Many operators rely on historical weather, not climate projections

✅ NERC flags elevated blackout risk amid extreme heat and drought

✅ Renewables and storage can boost capacity and cut emissions

As heat ramps up ahead of what forecasters say will be a hotter than normal summer, electricity experts and officials are warning that states may not have enough power to meet demand in the coming months. And many of the nation's grid operators are also not taking climate change into account in their planning, despite available grid resilience guidance that could inform upgrades, even as extreme weather becomes more frequent and more severe.

Power operators in the Central US, in their summer readiness report, have already predicted "insufficient firm resources to cover summer peak forecasts." That assessment accounted for historical weather and the latest NOAA outlook that projects for more extreme weather this summer.

But energy experts say that some power grid operators are not considering how the climate crisis is changing our weather — including more frequent extreme events — and that is a problem if the intent is to build a reliable power grid while accelerating investing in carbon-free electricity across markets.

"The reality is the electricity system is old and a lot of the infrastructure was built before we started thinking about climate change," said Romany Webb, a researcher at Columbia University's Sabin Center for Climate Change Law. "It's not designed to withstand the impacts of climate change."

Webb says many power grid operators use historical weather to make investment decisions, rather than the more dire climate projections, simply because they want to avoid the possibility of financial loss, even as climate-related credit risks for nuclear plants are being flagged, for investing in what might happen versus what has already happened. She said it's the wrong approach and it makes the grid vulnerable.

"We have seen a reluctance on the part of many utilities to factor climate change into their planning processes because they say the science around climate change is too uncertain," Webb said. "The reality is we know climate change is happening, we know the impact it has in terms of more severe heatwaves, hurricanes, drought, with recent hydropower constraints in British Columbia illustrating the risks, and we know that all of those things affect the electricity system so ignoring those impacts just makes the problems worse."

An early heatwave knocked six power plants offline in Texas earlier this month. Residents were asked to limit electricity use, keeping thermostats at 78 degrees or higher and, as extreme heat boosts electricity bills for consumers, avoid using large appliances at peak times. The Electric Reliability Council of Texas, or ERCOT, in its seasonal reliability report, said the state's power grid is prepared for the summer and has "sufficient" power for "normal" summer conditions, based on average weather from 2006 to 2020.

But NOAA's recently released summer outlook forecasts above average temperatures for every county in the nation.

"We are continuing to design and site facilities based on historical weather patterns that we know in the age of climate change are not a good proxy for future conditions," Webb said.

When asked if the agency is creating a blind spot for itself by not accounting for extreme weather predictions, an ERCOT spokesperson said the report "uses a scenario approach to illustrate a range of resource adequacy outcomes based on extreme system conditions, including some extreme weather scenarios."

The North American Electric Reliability Corporation, or NERC — a regulating authority that oversees the health of the nation's electrical infrastructure — has a less optimistic projection.

In a recent seasonal reliability report, NERC placed Texas at "elevated risk" for blackouts this summer. It also reported that while much of the nation will have adequate electricity this summer, several markets are at risk of energy emergencies.

California grid operators, who recently avoided widespread rolling blackouts as heat strained the grid, in its summer reliability report also based its readiness analysis on "the most recent 20 years of historical weather data." The report also notes the assessment "does not fully reflect more extreme climate induced load and supply uncertainties."

Compounding the US power grid's supply and demand problem is drought: NERC says there's been a 2% loss of reliable hydropower from the nation's power-producing dams. Add to that the rapid retirement of many coal power plants — all while nearly everything from toothbrushes to cars are now electrified. Energy experts say adding more renewables into the mix will have the dual impact of cutting climate change inducing greenhouse gas emissions but also increasing the nation's power supply, aligning with efforts such as California's 100% carbon-free mandate that aim to speed the transition.
 

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Alberta Renewable Energy Procurement is surging as corporate PPAs drive wind and solar growth, with the Pembina Institute and the Business Renewables Centre linking buyers and developers in Alberta's energy-only market near Medicine Hat.

Key Points

A market-led approach where corporations use PPAs to secure wind and solar power from Alberta projects.

✅ Corporate PPAs de-risk projects and lock in clean power.

✅ Alberta's energy-only market enables efficient transactions.

✅ Skilled workforce supports wind, solar, legal, and financing.

Alberta has big potential when it comes to providing renewable energy, advocates say.

The Pembina Institute says the practice of corporations committing to buy renewable energy is just taking off in Canada, and Alberta has both the energy sector and the skilled workforce to provide it.

Earlier this week, a company owned by U.S. billionaire Warren Buffett announced a large new wind farm near Medicine Hat. It has a buyer for the power.

Sara Hastings-Simon, director of the Pembina's Business Renewables Centre, says this is part of a trend.

"We're talking about the practice of corporate institutions purchasing renewables to meet their own electricity demand. And this is a really well-established driver for renewable energy development in the U.S.," she said. "You may be hearing headlines like Google, Apple and others that are buying renewables and we're helping to bring this practice to Canada."

The Business Renewables Centre (BRC) is a not-for-profit working to accelerate corporate and institutional procurement of renewables in Canada. The group held its inaugural all members event in Calgary on Thursday.

Hastings-Simon says shareholders and investors are encouraging more use of solar and wind power in Canada.

"We have over 10 gigawatts of renewable energy projects in the pipeline that are ready for buyers. And so we see multinational companies coming to Canada to start to procure here, as well as Canadian companies understanding that this is an opportunity for them as well," Hastings-Simon said.

"It's really exciting to see business interests driving renewable energy development."

Sara Hastings-Simon is the director of the Pembina Institute's Business Renewables Centre, which seeks to build up Alberta's renewable energy industry. (Mike Symington/CBC)

Hastings-Simon says renewable procurement could help dispel the narrative that it's all about oil and gas in Alberta by highlighting Alberta as a powerhouse for both green energy and fossil fuels in Canada.

She says the practice started with a handful of tech companies in the U.S. and has become more mainstream there, even as Canada remains a solar laggard to some observers, with more and more large companies wanting to reduce their energy footprint.

He says his U.S.-based organization has been working for years to speed up and expand the renewables market for companies that want to address their own sustainability.

"We try and make that a little bit easier by building out a community that can help to really reinforce each other, share lessons learned, best practices and then drive for transactions to have actual material impact worldwide," he said.

"We're really excited to be working with the Pembina group and the BRC Canada team," he said. "We feel our best value for this is just to support them with our experiences and lessons. They've been basically doing the same thing for many years helping to grow and grow and cultivate the market."

Porter says Alberta's market is more than ready.

"There are some precedent transactions already so people know it can work," he said. "The way Alberta is structured, being an energy-only market is useful. And I think that there is a strong ecosystem of both budget developers and service providers … that can really help these transactions get over the line."

As procurement ramps up, Hastings-Simon says Alberta already has the skilled workers needed to fill renewable energy jobs across the province.

"We have a lot of the knowledge that's needed, and that's everybody from the construction down through the legal and financing — all those pieces of building big projects," she said. "We are seeing increasing interest in people that want to become involved in that industry, and so there is increasing demand for training in things like solar power installation and wind technicians."

Hastings-Simon predicts an increase in demand for both the services and the workers.

"As this industry ramps up, we're going to need to have more workers that are active in those areas," she said. "So I think we can see a very nice increase — both the demand and the number of folks that are able to work in this field."

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Alberta Power Grid Level 2 Alert signals AESO reserve power usage, load management, supply shortage from generator outages, low wind, and limited imports, urging peak demand conservation to avoid blackouts and preserve grid reliability.

Key Points

An AESO status where reserves power the grid and load management is used during supply constraints to prevent blackouts.

✅ Triggered by outages, low wind, and reduced import capacity

✅ Peak hours 4 to 7 pm saw conservation requests

✅ Several hundred MW margin from Level 3 load shedding

Alberta's energy grid ran on reserves Wednesday, after multiple factors led to a supply shortage, a scenario explored in U.S. grid COVID response discussions as operators plan for contingencies.

At 3:52 p.m. Wednesday, the Alberta Electric System Operator issued a Level 2 alert, meaning that reserves were being used to supply energy requirements and that load management procedures had been implemented, while operators elsewhere adopted Ontario power staffing lockdown measures during COVID-19 for continuity. The alert ended at 6:06 p.m.

"This is due to unplanned generator outages, low wind and a reduction of import capability," the agency said in a post to social media. "Supply is tight but still meeting demand."

AESO spokesperson Mike Deising said the intertie with Saskatchewan had tripped off, and an issue on the British Columbia side of the border, as seen during BC Hydro storm response events, meant the province couldn't import power. 

"There are no blackouts … this just means we're using our reserve power, and that's a standard procedure we'll deploy," he said. 

AESO had asked that people reduce their energy consumption between 4 and 7 p.m., similar to Cal ISO conservation calls during grid strain, which is typically when peak use occurs. 

Deising said the system was several hundred MWs away from needing to move to an alert Level 3, with utilities such as FortisAlberta precautions in place to support continuity, which is when power is cut off to some customers in order to keep the system operating. Deising said Level 2 alerts are fairly rare and occur every few years. The last Level 3 alert was in 2013. 

According to the supply and demand report on AESO's website, the load on the grid at 5 p.m. was 10,643 MW.

That's down significantly from last week, when a heat wave pushed demand to record highs on the grid, with loads in the 11,700 MW range, contrasting with Ontario demand drop during COVID when many stayed home. 

A heat warning was issued Wednesday for Edmonton and surrounding areas shortly before 4 p.m., with temperatures above 29 C expected over the next three days, with many households seeing residential electricity use up during such periods. 

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