Warm weather leads to first recorded natural gas storage injection in February


Warm weather

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First February Natural Gas Injection reflects warm weather, low heating degree days, EIA storage build in the Lower 48, South Central salt and nonsalt sites, Bcf surplus, softer demand, steady production, and electricity generation

 

Key Points

An EIA-reported late-winter storage build from warm weather, fewer heating degree days, and South Central injections.

✅ Week ending Feb 24 saw a net 7 Bcf injection in the Lower 48

✅ Warm Northeast and Midwest cut heating demand and withdrawals

✅ South Central salt and nonsalt facilities led storage builds

 

Warmer than normal weather throughout much of the United States resulted in the first recorded net natural gas injection during a week in February since weekly storage data has been collected. For the week ending February 24, the amount of natural gas in storage in the Lower 48 states increased 7 billion cubic feet (Bcf). While some weeks during March in previous years had recorded injections, net injections of natural gas into storage do not typically occur until at least April.

Weekly changes in natural gas storage reflect changes in natural gas consumption, production, and, to a lesser extent, trade. Natural gas consumption is particularly sensitive to fluctuations in weather, and polar deep freezes can sharply increase heating demand and grid stress. Not only is natural gas consumed directly by furnaces and boilers in homes and businesses for heating, but natural gas is also used to generate electricity, which then fuels electric heat pumps and radiant heaters.

Temperatures throughout much of the United States have been higher than normal for many weeks this winter heating degrees days are a standard index of heating needs that are calculated based on deviations relative to a base temperature of 65 degrees Fahrenheit, and higher numbers of heating degree days reflect colder weather. For the week ending February 25, there were only 98 population-weighted heating degree days for the United States as a whole—a level more typical of mid-April weather, which often softens electricity and natural gas prices during winter. Based on normal weather data for 1971–2000, heating degree days would normally be near 172 for the week ending February 25. Temperatures were especially warm in the Northeast and Midwest, where natural gas heating is common.

The net injection of 7 Bcf during the week ending February 24, 2017, was extremely rare in a market where electricity prices have occasionally surged alongside weather-driven demand. Based on data from 2010–16, weekly changes during the month of February ranged from a net withdrawal of 48 Bcf to a net withdrawal of 243 Bcf. Previously, the earliest net injection of the calendar year occurred during the week ending March 16, 2012.

In the week ending February 24, natural gas injections in the South Central region offset unseasonably low withdrawals in other regions, as the broader energy crisis continues to influence electricity and gas markets. In EIA’s weekly report the amount of natural gas stored in South Central nonsalt facilities increased by 16 Bcf and in South Central salt facilities by 5 Bcf. After that injection, natural gas storage levels totaled 2,363 Bcf, or about 300 Bcf more than the previous five-year average for that week (2012–16). EIA’s latest short term forcast expects natural gas storage levels to fall to 2,121 Bcf by the end of March, or about 335 Bcf higher than the previous five-year average.

 

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GM president: Electric cars won't go mainstream until we fix these problems

Electric Vehicle Adoption Barriers include range anxiety, charging infrastructure, and cost parity; consumer demand, tax credits, lithium-ion batteries, and performance benefits are accelerating EV uptake, pushing SUVs and self-driving tech toward mainstream mobility.

 

Key Points

They are the key hurdles to mainstream EV uptake: range anxiety, sparse charging networks, and high upfront costs.

✅ Range targets of 300+ miles reduce anxiety and match ICE convenience

✅ Expanded home, work, and public charging speeds adoption

✅ Falling battery costs and incentives drive price parity

 

The automotive industry is hurtling toward a future that will change transportation the same way electricity changed how we light the world. Electric and self-driving vehicles will alter the automotive landscape forever — it's only a question of how soon, and whether the age of electric cars arrives ahead of schedule.

Like any revolution, this one will be created by market demand.
Beyond the environmental benefit, electric vehicle owners enjoy the performance, quiet operation, robust acceleration, style and interior space. And EV owners like not having to buy gasoline. We believe the majority of these customers will stay loyal to electric cars, and U.S. EV sales are soaring into 2024 as this loyalty grows.

But what about non-EV owners? Will they want to buy electric, and is it time to buy an electric car for them yet? About 25 years ago, when we first considered getting into the electric vehicle business with a small car that had about 70 miles of range, the answer was no. But today, the results are far more encouraging.

We recently held consumer clinics in Los Angeles and Chicago and presented people with six SUV choices: three gasoline and three electric. When we asked for their first choice to purchase, 40% of the Chicago respondents chose an electric SUV, and 45% in LA did the same. This is despite a several thousand-dollar premium on the price of the electric models, and despite that EV sales still lag gas cars nationally today, consumer interest was strong (but also before crucial government tax credits that we believe will continue to drive people toward electric vehicles and help fuel market demand).

They had concerns, to be sure. Most people said they want vehicles that can match gasoline-powered vehicles in range, ease of ownership and cost. The sooner we can break down these three critical barriers, the sooner electric cars will become mainstream.

Range
Range is the single biggest barrier to EV acceptance. Just as demand for gas mileage doesn't go down when there are more gas stations, demand for better range won't ease even as charging infrastructure improves. People will still want to drive as long as possible between charges.

Most consumers surveyed during our clinics said they want at least 300 miles of range. And if you look at the market today, which is driven by early adapters, electric cars have hit an inflection point in demand, and the numbers bear that out. The vast majority of electric vehicles sold — almost 90% — are six models with the highest range of 238 miles or more — three Tesla models, the Chevrolet Bolt EV, the Hyundai Kona and the Kia Niro, according to IHS Markit data.

Lithium-ion batteries, which power virtually all electric cars on the road today, are rapidly improving, increasing range with each generation. At GM, we recently announced that our 2020 Chevrolet Bolt EV will have a range of 259 miles, a 21-mile improvement over the previous model. Range will continue to improve across the industry, and range anxiety will dissipate.

Charging infrastructure
Our research also shows that, among those who have considered buying an electric vehicle, but haven't, the lack of charging stations is the number one reason why.

For EVs to gain widespread acceptance, manufacturers, charging companies, industry groups and governments at all levels must work together to make public charging available in as many locations as possible. For example, we are seeing increased partnership activity between manufacturers and charging station companies, as well as construction companies that build large infrastructure projects, as the American EV boom approaches, with the goal of adding thousands of additional public charging stations in the United States.

Private charging stations are just as important. Nearly 80% of electric vehicle owners charge their vehicles at home, and almost 15% at work, with the rest at public stations, our research shows. Therefore, continuing to make charging easy and seamless is vital. To that end, more partnerships with companies that will install the chargers in consumers' homes conveniently and affordably will be a boon for both buyers and sellers.

Cost
Another benefit to EV ownership is a lower cost of operation. Most EV owners report that their average cost of operation is about one-third of what a gasoline-powered car owner pays. But the purchase price is typically significantly higher, and that's where we should see change as each generation of battery technology improves efficiency and reduces cost.

Looking forward, we think electric vehicle propulsion systems will achieve cost parity with internal combustion engines within a decade or sooner, and will only get better after that, driving sticker prices down and widening the appeal to the average consumer. That will be driven by a number of factors, including improvements with each generation of batteries and vehicles, as well as expected increased regulatory costs on gasoline and diesel engines.

Removing these barriers will lead to what I consider the ultimate key to widespread EV adoption — the emergence of the EV as a consumer's primary vehicle — not a single-purpose or secondary vehicle. That will happen when we as an industry are able to offer the utility, cost parity and convenience of today's internal combustion-based cars and trucks.

To get the electric vehicle to first-string status, manufacturers simply must make it as good or better than the cars, trucks and crossovers most people are used to driving today. And we must deliver on our promise of making affordable, appealing EVs in the widest range of sizes and body styles possible. When we do that, electric vehicle adoption and acceptance will be widespread, and it can happen sooner than most people think.

Mark Reuss is president of GM. The opinions expressed in this commentary are his own.

 

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TotalEnergies to Acquire German Renewables Developer VSB for US$1.65 Billion

TotalEnergies VSB Acquisition accelerates renewable energy growth, expanding wind and solar portfolios across Germany and Europe, advancing decarbonization, net-zero targets, and the energy transition through a US$1.65 billion strategic clean power investment.

 

Key Points

A US$1.65B deal: TotalEnergies acquires VSB to scale wind and solar in Europe and advance net-zero goals.

✅ US$1.65B purchase expands wind and solar pipeline

✅ Strengthens presence in Germany and wider Europe

✅ Advances net-zero, energy transition objectives

 

In a major move to expand its renewable energy portfolio, French energy giant TotalEnergies has announced its decision to acquire German renewable energy developer VSB for US$1.65 billion. This acquisition represents a significant step in TotalEnergies' strategy to accelerate its transition from fossil fuels to greener energy sources, aligning with the global push towards sustainability and carbon reduction, as reflected in Europe's green surge across key markets.

Strengthening TotalEnergies’ Renewable Energy Portfolio

TotalEnergies has long been one of the largest players in the global energy market, historically known for its oil and gas operations. However, in recent years, the company has made a concerted effort to diversify its portfolio and shift its focus toward renewable energy. The purchase of VSB, a leading developer of wind and solar energy projects, occurs amid rising European wind investment trends and is a clear reflection of TotalEnergies' commitment to this green energy transition.

VSB, based in Dresden, Germany, specializes in the development, construction, and operation of renewable energy projects, particularly wind and solar power. The company has a significant presence in Europe, with a growing portfolio of projects in countries like Germany, where clean energy accounts for 50% of electricity today, Poland, and the Czech Republic. The acquisition will allow TotalEnergies to bolster its renewable energy capacity, particularly in the wind and solar sectors, which are key components of its long-term sustainability goals.

By acquiring VSB, TotalEnergies is not only increasing its renewable energy output but also gaining access to a highly experienced team with a proven track record in energy project development. This move is expected to expedite TotalEnergies’ renewable energy ambitions, enabling the company to build on VSB’s strong market presence and established partnerships across Europe.

VSB’s Strategic Role in the Energy Transition

VSB’s expertise in the renewable energy sector makes it a valuable addition to TotalEnergies' green energy strategy. The company has been at the forefront of the energy transition in Europe, particularly in wind energy development, as offshore wind is set to become a $1 trillion business over the coming decades. Over the years, VSB has completed numerous large-scale wind projects, including both onshore and offshore installations.

The acquisition also positions TotalEnergies to better compete in the rapidly growing European renewable energy market, including the UK, where offshore wind is powering up alongside strong demand due to increased governmental focus on achieving net-zero emissions by 2050. Germany, in particular, has set ambitious renewable energy targets as part of its Energiewende initiative, which aims to reduce the country’s carbon emissions and increase the share of renewables in its energy mix. By acquiring VSB, TotalEnergies is not only enhancing its capabilities in Germany but also gaining a foothold in other European markets where VSB has operations.

With Europe increasingly shifting toward wind and solar power as part of its decarbonization efforts, including emerging solutions like offshore green hydrogen that complement wind buildouts, VSB’s track record of developing large-scale, sustainable energy projects provides TotalEnergies with a strong competitive edge. The acquisition will further TotalEnergies' position as a leader in the renewable energy space, especially in wind and solar power generation.

Financial and Market Implications

The US$1.65 billion deal marks TotalEnergies' largest renewable energy acquisition in recent years and underscores the growing importance of green energy investments within the company’s broader business strategy. TotalEnergies plans to use this acquisition to scale up its renewable energy assets and move closer to its target of achieving net-zero emissions by 2050. The deal also positions TotalEnergies to capitalize on the expected growth of renewable energy across Europe, particularly in countries with aggressive renewable energy targets and incentives.

The transaction is also expected to boost TotalEnergies’ presence in the global renewable energy market. As the world increasingly turns to wind, solar, and other sustainable energy sources, TotalEnergies is positioning itself to be a major player in the global energy transition. The acquisition of VSB complements TotalEnergies' previous investments in renewable energy and further aligns its portfolio with international sustainability trends.

From a financial standpoint, TotalEnergies’ purchase of VSB reflects the growing trend of large energy companies investing heavily in renewable energy. With wind and solar power becoming more economically competitive with fossil fuels, this investment is seen as a prudent long-term strategy, one that is likely to yield strong returns as demand for clean energy continues to rise.

Looking Ahead: TotalEnergies' Green Transition

TotalEnergies' acquisition of VSB is part of the company’s broader strategy to diversify its energy offerings and shift away from its traditional reliance on oil and gas. The company has already made significant strides in renewable energy, with investments in solar, wind, and battery storage projects across the globe, as developments like France's largest battery storage platform underline this momentum. The VSB acquisition will only accelerate these efforts, positioning TotalEnergies as one of the foremost leaders in the clean energy revolution.

By 2030, TotalEnergies plans to allocate more than 25% of its total capital expenditure to renewable energies and electricity. The company has already set ambitious goals to reduce its carbon footprint and shift its business model to align with the global drive toward sustainability. The integration of VSB into TotalEnergies’ portfolio signals a firm commitment to these goals, ensuring the company remains at the forefront of the energy transition.

In conclusion, TotalEnergies’ purchase of VSB for US$1.65 billion marks a significant milestone in the company’s renewable energy journey. By acquiring a company with deep expertise in wind and solar power development, TotalEnergies is taking decisive steps to strengthen its position in the renewable energy market and further its ambitions of achieving net-zero emissions by 2050. This acquisition will not only enhance the company’s growth prospects but also contribute to the ongoing global shift toward clean, sustainable energy sources.

 

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Energy Security Support to Ukraine

U.S. Energy Aid to Ukraine delivers emergency electricity grid equipment, generators, transformers, and circuit breakers, supports ENTSO-E integration, strengthens energy security, and advances decarbonization to restore power and heat amid Russian attacks.

 

Key Points

U.S. funding and equipment stabilize Ukraine's power grid, strengthen energy security, and advance ENTSO-E integration.

✅ $53M for transformers, breakers, surge arresters, disconnectors

✅ $55M for generators and emergency heat to municipalities

✅ ENTSO-E integration, cybersecurity, nuclear safety support

 

In the midst of Russia’s continued brutal attacks against Ukraine’s energy infrastructure, Secretary of State Blinken announced today during a meeting of the G7+ on the margins of the NATO Ministerial in Bucharest that the United States government is providing over $53 million to support acquisition of critical electricity grid equipment. This equipment will be rapidly delivered to Ukraine on an emergency basis to help Ukrainians persevere through the winter, as the country prepares for winter amid energy challenges. This supply package will include distribution transformers, circuit breakers, surge arresters, disconnectors, vehicles and other key equipment.

This new assistance is in addition to $55 million in emergency energy sector support for generators and other equipment to help restore emergency power and heat to local municipalities impacted by Russia’s attacks on Ukraine’s power system, while both sides accuse each other of energy ceasefire violations that complicate repairs. We will continue to identify additional support with allies and partners, and we are also helping to devise long-term solutions for grid restoration and repair, along with our assistance for Ukraine’s effort to advance the energy transition and build an energy system decoupled from Russian energy.

Since Russia’s further invasion on February 24, working together with Congress, the Administration has provided nearly $32 billion in assistance to Ukraine, including $145 million to help repair, maintain, and strengthen Ukraine’s power sector in the face of continued attacks. We also have provided assistance in areas such as EU integration and regional electricity trade, including electricity imports to stabilize supply, natural gas sector support to maximize resource development, support for nuclear safety and security, and humanitarian relief efforts to help Ukrainians to overcome the impacts of energy shortages.

Since 2014, the United States has provided over $160 million in technical support to strengthen Ukraine’s energy security, including to strengthen EU interconnectivity, increase energy supply diversification, and promote investments in energy efficiency, renewable energy, and clean energy technologies and innovation.  Much of this support has helped prepare Ukraine for its eventual interconnection with Europe’s ENTSO-E electricity grid, aligning with plans to synchronize with ENTSO-E across the integrated power system, including the island mode test in February 2022 that not only demonstrated Ukraine’s progress in meeting the EU’s technical requirements, but also proved to be critical considering Russia’s subsequent military activity aimed at disrupting power supplies and distribution in Ukraine.

 

Department of Energy (DOE)

  • With the increased attacks on Ukraine’s electricity grid and energy infrastructure in October, DOE worked with the Ukrainian Ministry of Energy and DOE national laboratories to collate, vet, and help prioritize lists of emergency electricity equipment for grid repair and stabilization amid wider global energy instability affecting supply chains.
  • Engaged at the CEO level U.S. private sector and public utilities and equipment manufacturers to identify $35 million of available electricity grid equipment in the United States compatible with the Ukrainian system for emergency delivery. Identified $17.5 million to support purchase and transportation of this equipment.
  • With support from Congress, initiated work on full integration of Ukraine with ENTSO-E to support resumption of Ukrainian energy exports to other European countries in the region, including funding for energy infrastructure analysis, collection of satellite data and analysis for system mapping, and work on cyber security, drawing on the U.S. rural energy security program to inform best practices.
  • Initiated work on a new dynamic model of interdependent gas and power systems of Europe and Ukraine to advance identification and mitigation of critical vulnerabilities.
  • Delivered emergency diesel fuel and other critical materials needed for safe operation of Ukrainian nuclear power plants, as well as initiated the purchase of three truck-mounted emergency diesel backup generators to be delivered to improve plant safety in the event of the loss of offsite power.

U.S. Department of State

  • Building on eight years of technical engagement, the State Department continued to provide technical support to Naftogaz and UkrGasVydobuvannya to advance corporate governance reform, increase domestic gas production, provide strategic planning, and assess critical sub-surface and above-ground technical issues that impact the company’s core business functions.
  • The State Department is developing new programs focused on emissions abatement, decarbonization, and diversification, acknowledging the national security benefits of reducing reliance on fossil fuels to support Ukraine’s ambitious clean energy and climate goals and address the impacts of reduced supplies of natural gas from Russia.
  • The State Department led a decades-long U.S. government engagement to develop and expand natural gas reverse flow (west-to-east) routes to enhance European and Ukrainian energy security. Ukraine is now able to import natural gas from Europe, eliminating the need for Ukraine to purchase natural gas from Gazprom.

 

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More young Canadians would work in electricity… if they knew about it

Generation Impact Report reveals how Canada's electricity sector can recruit Millennials and Gen Z, highlighting workforce gaps, career pathways, innovative projects, secure pay, and renewable energy opportunities to attract young talent nationwide.

 

Key Points

An EHRC survey on youth views of electricity careers and recruitment strategies to build a skilled workforce.

✅ Surveyed 1,500 Canadians aged 18-36 nationwide

✅ Highlights barriers: low awareness of sector roles

✅ Emphasizes fulfilling work, secure pay, innovation

 

Young Canadians make up far less of the electricity workforce than other sectors, says Electricity Human Resources Canada, as noted in an EHRC investment announcement that highlights sector priorities, and its latest report aims to answer the question “Why?”.

The report, “Generation Impact: Future Workforce Perspectives”, was based on a survey of 1500 respondents across Canada between the ages of 18 and 36. This cohort’s perspectives on the electricity sector were mostly Positive or Neutral, and that Millennial and Gen Z Canadians are largely open to considering careers in electricity, especially as initiatives such as a Nova Scotia energy training program expand access.

The biggest barrier is a knowledge gap in electrical safety that limits awareness of the opportunities available.

To an industry looking to develop a pipeline of young talent, “Generation Impact” reveals opportunities for recruitment; key factors that Millennial and Gen Z Canadians seek in their ideal careers include fulfilling work, secure pay and the chance to be involved in innovative projects, including specialized arc flash training in Vancouver opportunities that build expertise.

“The electricity sector is already home to the kinds of fulfilling and innovative careers that many in the Millennial and Gen Z cohorts are looking for,” said Michelle Branigan, CEO of EHRC. “Now it’s just a matter of communicating effectively about the opportunities and benefits, including leadership in worker safety initiatives, our sector can offer.”

“Engaging young workers in Canada’s electricity sector is critical for developing the resiliency and innovation needed to support the transformation of Canada’s energy future, especially as working from home drives up electricity bills and reshapes demand,” said Seamus O’Regan, Canada’s Minister of Natural Resources. “The insights of this report will help to position the sector competitively to leverage the talent and skills of young Canadians.”

“Generation Impact” was funded in part by the Government of Canada’s Student Work Placement Program and Natural Resources Canada’s Emerging Renewable Power Program, in a context of rising residential electricity use that underscores workforce needs.

 

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Britons could save on soaring bills as ministers plan to end link between gas and electricity prices

UK Electricity-Gas Price Decoupling aims to reform wholesale electricity pricing under the Energy Security Bill, shielding households from gas price spikes, supporting renewables, and easing the cost-of-living crisis through market redesign and transparent tariffs.

 

Key Points

Policy to decouple power prices from gas via the Energy Security Bill, stabilizing bills and reflecting renewables

✅ Breaks gas-to-power pricing link to cut electricity costs

✅ Reduces volatility; shields households from global gas shocks

✅ Highlights benefits of renewables and market transparency

 

Britons could be handed relief on rocketing household bills under Government plans to sever the link between the prices of gas and electricity, including proposals to restrict energy prices in the market, it has emerged.

Ministers are set to bring forward new laws under the Energy Security Bill to overhaul the UK's energy market in the face of the current cost-of-living crisis.

They have promised to provide greater protection for Britons against global fluctuations in energy prices, through a price cap on bills among other measures.

The current worldwide crisis has been exacerbated by the Ukraine war, which has sent gas prices spiralling higher.

Under the current make-up of Britain's energy market, soaring natural gas prices have had a knock-on effect on electricity costs.

But it has now been reported the new legislation will seek to prevent future shocks in the global gas market having a similar impact on electricity prices.

Yet the overhaul might not come in time to ease high winter energy costs for households ahead of this winter.

According to The Times, Business Secretary Kwasi Kwarteng will outline proposals for reforms in the coming weeks.

These will then form part of the Energy Security Bill to be introduced in the autumn, with officials anticipating a decrease in energy bills by April.

The newspaper said the plans will end the current system under which the wholesale cost of gas effectively determines the price of electricity for households.

Although more than a quarter of Britain's electricity comes from renewable sources, under current market rules it is the most expensive megawatt needed to meet demand that determines the price for all electricity generation.

This means that soaring gas prices have driven up all electricity costs in recent months, even though only around 40% of UK electricity comes from gas power stations.

Energy experts have compared the current market to train passengers having to pay the peak-period price for every journey they make.

One Government source told The Times: 'In the past it didn’t really matter because the price of gas was reasonably stable.

'Now it seems completely crazy that the price of electricity is based on the price of gas when a large amount of our generation is from renewables.'

It was also claimed ministers hope the reforms will make the market more transparent and emphasise to consumers the benefits of decarbonisation, amid an ongoing industry debate over free electricity for consumers.

A Government spokesperson said: 'The high global gas prices and linked high electricity prices that we are currently facing have given added urgency to the need to consider electricity market reform.

 

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Hydro One’s takeover of U.S. utility sparks customer backlash: ‘This is an incredibly bad idea’

Hydro One-Avista acquisition sparks Idaho regulatory scrutiny over foreign ownership, utility merger impacts, rate credits, and public interest, as FERC and FCC approvals advance and consumers question governance, service reliability, and long-term rate stability.

 

Key Points

A cross-border utility merger proposal with Idaho oversight, weighing foreign ownership, rates, and reliability.

✅ Idaho PUC review centers on public interest and rate impacts.

✅ FERC and FCC approvals granted; state decisions pending.

✅ Avista to retain name and Spokane HQ post-transaction.

 

“Please don’t sell us to Canada.” That refrain, or versions of it, is on full display at the Idaho Public Utilities Commission, which admittedly isn’t everyone’s go-to entertainment site. But it is vitally important for this reason: the first big test of the expansionist dreams of the politically tempest-tossed Hydro One, facing political risk as it navigates markets, rests with its successful acquisition of Avista Corp., provider of electric generation, transmission and distribution to retail customers spread from Oregon to Washington to Montana and Idaho and up into Alaska.

The proposed deal — announced last summer, but not yet consummated — marks the first time the publicly traded Hydro One has embarked upon the acquisition of a U.S. utility. And if Idahoans spread from Boise to Coeur d’Alene to Hayden are any indication, they are not at all happy with the idea of foreign ownership. Here’s Lisa McCumber, resident of Hayden: “I am stating my objection to this outrageous merger/takeover. Hydro One charges excessive fees to the people it provides for, this is a monopoly beyond even what we are used to. I, in no way, support or as a customer, agree with the merger of this multi-billion-dollar, foreign, company.”

#google#

Or here’s Debra Bentley from Coeur d’Alene: “Fewer things have more control over a nation than its power source. In an age where we are desperately trying to bring American companies back home and ‘Buy American’ is somewhat of a battle cry, how is it even possible that it would or could be allowed for this vital necessity … to be controlled by a foreign entity?”

Or here’s Spencer Hutchings from Sagle: “This is an incredibly bad idea.”

There are legion of similar emails from concerned consumers, and the Maine transmission line debate offers a parallel in public opposition.

The rationale for the deal? Last fall Hydro One CEO Mayo Schmidt testified before the Idaho commission, which regulates all gas, water and electricity providers in the state. “Hydro One is a pure-play transmission and distribution utility located solely within Ontario,” Schmidt told commissioners. “It seeks diversification both in terms of jurisdictions and service areas. The proposed Transaction with Avista achieves both goals by expanding Hydro One into the U.S. Pacific Northwest and expanding its operations to natural gas distribution and electric generation. The proposed Transaction with Avista will deliver the increased scale and benefits that come from being a larger player in the utility industry.”

Translation: now that it is a publicly traded entity, Hydro needs to demonstrate a growth curve to the investment community. The value to you and me? Arguable. This is a transaction framed as a benefit to shareholders, one that won’t cause harm to customers. Premier Kathleen Wynne is feeling the pain of selling off control of an essential asset. In his testimony to the commission, Schmidt noted that the Avista acquisition would take the province’s Hydro ownership to under 45 per cent. (The Electricity Act technically prevents the sale of shares that would take the government’s ownership position below 40 per cent, though acquisitions appear to allow further dilution. )

Stratospheric compensation, bench-marked against other chief executives who enjoy similarly outsized rewards, is part of this game. I have written about Schmidt’s unconscionable compensation before, but that was when he was making a relatively modest $4 million. Relative, that is, to his $6.2 million in 2017 compensation ($3.5 million of that is in the form of share based awards).

Should the acquisition of Avista be approved, amendments to the CIC, or change in control agreements, for certain named Avista executive officers will allow them to voluntarily terminate their employment without “good reason.” That includes Scott Morris, the company’s CEO, who will exit with severance of $6.9 million (U.S.) and additional benefits taking the total to a potential $15.7 million.

Back to the deal: cost savings over time could be achieved, Schmidt continued in his testimony, though he was unable to quantify those. The integration between the two companies, he promised, will be “seamless.” Retail customers in Idaho, Washington and Oregon would benefit from proposed “Rate Credits” equalling an estimated $15.8 million across five years, even as Hydro One seeks to redesign its bills in Ontario. Idahoans would see a one per cent rate decrease through that period.

While Avista would become a wholly owned Hydro subsidiary, it would retain its name, and its headquarters in Spokane, Wash. In the case of Idaho specifically, a proposed settlement in April, subject to final approval by the commission, stipulates agreements on everything from staffing to governance to community contributions.

Will that meet the test? It’s up to the commission to determine whether the proposed transaction will keep a lid on rates and is “consistent with the public interest.” Hydro One is hoping for a decision from regulatory agencies in all the named states by mid-August and a closing date by the end of September, though U.S. regulators can ultimately determine the fate of such deals. The Federal Energy Regulatory Commission granted its approval in January, followed last week by the Federal Communications Commission. Washington and Alaska have reached settlement agreements. These too are pending final state approvals.

The $5.3-billion deal (or $6.7 billion Canadian) is subject to ongoing hearings in Idaho, and elsewhere rate hikes face opposition as hearings begin. Members of the public are encouraged to have their say. The public comment deadline is June 27.

 

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