“You know the parable about the chicken, the pig and the breakfast?”

Boise lawyer Norman Semanko is on the phone for what may be an eleventh-hour conversation about the proposed takeover of Avista Corp. by Hydro One. And I have no idea what he’s talking about.

It seems there was once a pig and a chicken and they were chatting about the idea of contributing to a breakfast for a kindly farmer and the chicken offered eggs, of course, and thence pressured the pig to provide bacon. Have I got that right? Anyway, the punchline rests with the pig: “For you it’s a contribution. For me it’s a commitment.”

Perhaps it’s more a fable. Or a cautionary business tale.

“We’re the pig,” Semanko says, which is his take on the Idaho ratepayers who await the final word from the state’s public utilities commission on the proposed $5.3-billion (U.S.) deal.

On Monday, Semanko, lawyer for the Avista customer group that opposes the merger, gets his last chance to cross-examine commission staff as well as Hydro One and Avista executives as to the merits of a mammoth deal upon which Hydro One has staked its plan for cross-border expansion.

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Monday’s technical hearing had been scheduled for July. But the governance blowup at Hydro One caused regulators to vacate that hearing, triggering a delay of the hoped for September approval of the merger, pushed now to, maybe, mid-December in Idaho and Avista’s home state of Washington. A second round of due diligence was carried out. Monday’s hearing is expected to take at least a full day, and will address staff testimony submitted earlier this month.

Here’s what stands out for me: the testimony of Terri Carlock, an administrator with the regulator’s utilities division. It was the job of staff to analyze the proposed arrangement, and it fell to Carlock to summarize that analysis and outline unresolved concerns. The way I read it, Carlock had a great deal more material to work with than she would have had if Premier Doug Ford had kept his mitts off the company.

The premier’s level of interference “goes well beyond the normal role of any shareholder,” Carlock stated. And this: “There does not appear to be a limit on the Province of Ontario’s authority over Hydro One.” And this, in reference to new guidelines around executive compensation at the province’s utility: “Such far-reaching authority — especially around the determination of employee wages — from a single shareholder demonstrates significant managerial oversight of Hydro One.” Political interference remains “a real risk.”

Of course all of this contrasts with the prior testimony of ousted CEO Mayo Schmidt, who testified before the commission that the government of Ontario “does not hold or exercise any managerial oversight over Hydro One.”

We’re not splitting hairs here. It is the obligation of the commission to determine whether the merger is in the public interest. A factor in that is whether the corporate alliance, which would result in Avista becoming a wholly owned subsidiary of Hydro One, breaches a state statute (61-327) that restricts utility ownership by a foreign government or quasi-governmental organization.

I called Semanko up because a point made by Terri Carlock caught my eye. “With regard to foreign ownership in particular, Staff believes Idaho Code 61-327 may provide a total bar to the proposed merger,” Carlock testified. “We believe the Commission should analyze this possibility prior to making a final determination.”

“What’s a controlling interest when someone has over 40 per cent and is statutorily guaranteed to have over 40 per cent and no one is allowed statutorily to have over 10 per cent?” asks Semanko. “There are some of us down here in the States who are looking at this, saying this is still really a Crown corporation. It’s just that they sold some of the stock so they could build roads and infrastructure. They still very much exercise control over Hydro One.”

Avista CEO Scott Morris had previously testified that such a foreign takeover would not be unique. Carlock’s response: “A foreign company owning an American utility is very different from a foreign company whose controlling shareholder is a foreign government buying an American utility, which is the circumstance in the proposed Avista and Hydro One merger.”

Last Wednesday, Semanko filed his latest submission with the commission, opposing the merger both on the grounds just discussed and on the grounds that the deal is not in the public interest. “I’ll be asking questions of every witness,” he said of Monday’s proceeding.

Is the deal in the public interest? Carlock’s testimony indicates that staff is satisfied when it comes to service rates and assurances that there will be no rate increases as a result of the merger and that rate credits will benefit consumers. The $5-million energy efficiency fund to be created post-merger is also seen as a plus.

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That message may not be getting through to customers. On Wednesday, the utilities commission put out a press release about Monday’s hearing, noting that more than 600 written comments had been received from the public. “The vast majority of public comments oppose the merger,” the commission said.

Norman Semanko’s Avista customer group, in other words, a powerful gathering of ratepayers who, like the pig, do not want to make the ultimate sacrifice.

Clarification - November 28, 2018: This article was edited from a previous version to include that Norman Semanko will also be conducting a cross-examination of Hydro One and Avista executives.

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