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TORONTO — Hydro One and Avista Corp. say they have agreed to cancel their merger after regulators in Washington state and Idaho shot down the deal.

The energy companies say that after weighing their chances of getting those decisions reversed, both their boards of directors decided it was best to call off the plan.

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They say under the terms of the merger agreement, Hydro One must now pay Avista US$103 million in termination fees.

Earlier this month, the Washington Utilities and Transportation Commission denied a request from both companies to reconsider its rejection of the Ontario utility’s planned takeover of the American company.

The request was issued after regulators found that the $6.7-billion planned merger would not sufficiently safeguard Avista customers from the whims of the Ontario government, which is Hydro One’s largest shareholder.

The regulator has pointed to Premier Doug Ford’s efforts to force former Hydro One CEO Mayo Schmidt to retire — which was followed by the resignation of the utility’s entire board — as a sign that the province was willing to put political interests above those of shareholders.