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Hydro One to pay American energy company $103M US after failed merger plan

Hydro One to pay American energy company $103M US after failed merger plan


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.

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.

Ontario electricity customers won’t foot bill, minister says

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.

The Idaho Public Utilities Commission also denied the proposed takeover, finding that the companies had failed to demonstrate that the transaction met the public interest.

The merger required approvals from state regulatory commissions in Washington, Idaho, Oregon, Montana and Alaska to go through, but only the latter two have approved it. Oregon’s public utility commission opted last week to put its decision on hold.

Ontario Energy Minister Greg Rickford said the Progressive Conservative government accepts the decision made by the two utilities, and will continue to focus on bringing down hydro rates for Ontarians.

“Any costs incurred as a result of today’s decision will not be paid by Ontario electricity customers,” Rickford said in a
statement.  



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French minister announces Ghosn resignation from Renault

French minister announces Ghosn resignation from Renault


France’s finance minister says that Carlos Ghosn, who is fighting breach of trust and other charges in Japan, has resigned as head of Renault.

Ghosn has been detained for more than two months in Japan.

French Finance Minister Bruno Le Maire said at the World Economic Forum in Davos on Thursday that Ghosn formally handed in his resignation to Renault’s temporary leadership on Wednesday evening.

The board of French carmaker Renault SA is expected to name Jean-Dominique Senard of Michelin as chairman, and Renault executive Thierry Bolloré as CEO. 

Japan’s prosecutors, meanwhile, are defending Ghosn’s detention more than two months after he was arrested.

Shin Kukimoto, deputy chief prosecutor, told reporters Thursday the authorities want Ghosn in custody because of fears he might tamper with evidence.

Kukimoto also said Japan lacks a system for electronic monitoring of suspects released on bail. Ghosn offered to wear such a monitoring device in his latest request to be released. The Tokyo District Court has twice rejected his formal requests to be allowed out of the Tokyo Detention Center on bail.

Ghosn says he is innocent of any wrongdoing. He has been charged with falsifying financial statements and breach of trust.



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What Venezuelan turmoil could mean for Canada's oilpatch

What Venezuelan turmoil could mean for Canada’s oilpatch


More turbulence in Venezuela — including the threat of United States sanctions on its crude oil exports — has Canada’s oilpatch watching carefully for how the impact will ripple across the industry. 

Analysts say sanctions, or a further drop in Venezuelan oil output, could leave American refiners on the hunt for heavy crude from elsewhere, providing a potential price lift for Canadian producers.

But with limited ability to get more oil to the Gulf Coast, some believe the Canadian sector won’t be able to seize the additional market share it otherwise might.

Longer term, if Venezuela changes political regimes, the upheaval could see the South American country’s oil production soar once again — and change the outlook for global prices.

“Any more reduction in Venezuela crude could have an impact on the price of heavy crude for Canadian producers,” said Kevin Birn, an oilsands analyst with IHS Markit in Calgary. 

“In terms of our ability to maximize the benefit, we are constrained by our own infrastructure.”

Venezuela’s political and economic outlook is unclear as opposition leader Juan Guaido and interim president Nicolas Maduro struggle for control of the country.

Traditionally, Canada and Venezuela produce heavy oil that compete for space in the U.S. market. However, Venezuela crude production has fallen dramatically in recent years amid economic and political strife.

“There’s been a developing opportunity for Canadian crude, in particular going into the U.S. Gulf Coast refineries,” said Allan Fogwill, president of the Canadian Energy Research Institute.

“They were getting most of their heavy crude from Venezuela and Mexico — and a little bit from Canada. Now, with the concerns in Venezuela, that means those refineries are looking north to Canadian producers.”

Fogwill said limited pipeline capacity and rising demand for Canadian crude at those refineries is one reason why rail shipments of oil to the United States have been on the rise.

Maduro attends a rally in support of his government and to commemorate the 61st anniversary of the end of the dictatorship of Marcos Perez Jimenez in Caracas on Thursday. (Miraflores Palace/Handout/Reuters)

Last fall, Canadian shipping constraints to the U.S. led to a backlog of oil and steep discounts on Alberta crude. Prices increased significantly when the province imposed mandatory crude production cuts for 2019.

The heavy blend of oil from Alberta’s oilsands known as Western Canada Select was trading at $43.47 US a barrel on Thursday, up $1.36 US on anticipation that any decline in Venezuelan crude would result in more demand for WCS.

Rory Johnston, a commodity economist at Scotiabank, said the Canadian heavy crude price could further improve depending on whether the U.S. moves forward with sanctions and what happens with Venezuelan production.

“But I think at this stage it’s fairly unambiguously bullish for oil prices in the short term,” he said.

Robert Fitzmartyn, head of energy institutional research at GMP FirstEnergy, said he’ll be watching to see how any related improvement in crude prices filters into the market and Canadian energy stocks.

“The stock market probably responds mildly,” Fitzmartyn said.

Longer term, however, there are even more questions.

If there is regime change in Venezuela, oil production could ramp up to more traditional levels and that might come to weigh on oil prices, Johnston said.

“What that likely would mean is actually a slightly more bearish outlook longer term,” he said.

“Production has been declining so rapidly there [in Venezuela] that really, at this stage, virtually any alternative governance is likely to be better at managing that production.” 

Fogwill said that if Venezuelan production returns to traditional levels, it will have an impact on world prices, too.

“If Venezuela came roaring back … that could undermine the high price for oil.” 



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Airbus, Bombardier warn of consequences for U.K. factories in case of no-deal Brexit

Airbus, Bombardier warn of consequences for U.K. factories in case of no-deal Brexit

The CEO of European aerospace giant Airbus has warned it could move its British operations elsewhere if the United Kingdom leaves the EU without a deal in a hard Brexit.

In a video on the plane maker’s website, Tom Enders said Britain’s aerospace sector “stands at the precipice” because of uncertainty over when and how the country will pull out of the European Union, as it voted to do more than two years ago.

Earlier this month, the British Parliament roundly rejected the deal that Prime Minister Theresa May negotiated with European lawmakers, leaving little time to come up with a new plan before the deadline to leave, with or without a deal, at the end of March.

The looming threat of a hard Brexit has created uncertainty for British companies, and Airbus — which has factories all over Europe, and even some in North America — says there will be a price to pay for that uncertainty.

“If there is a no-deal Brexit, we at Airbus will have to make potentially very harmful decisions for the U.K.,” Enders said.

Airbus employs 14,000 people in Britain, including 6,000 at its main wings factory at Broughton, Wales, and 3,000 in Filton, western England, where wings are designed and supported.

Watch Enders’s comments in the video below:

“Please don’t listen to the Brexiteers’ madness which asserts that, because we have huge plants here, we will not move and we will always be here. They are wrong,” Enders said.

“Aerospace is a long-term business and we could be forced to redirect future investments in the event of a no-deal Brexit. And make no mistake there are plenty of countries out there who would love to build the wings for Airbus aircraft.

“It is a disgrace that more than two years after the results of the 2016 referendum that businesses are still unable to plan properly for the future,” he said.

“We still have no idea what is really going on here.”

Canadian jet maker Bombardier, which has a significant presence in Belfast, said it is “imperative” that lawmakers find a deal to create as orderly an exit as possible.

Airbus employs 14,000 people in Britain, including this man who helps assemble wings for A320s and A330s at a facility in Broughton. Despite Brexiteers’ claims to the contrary, the company could and would pull of out of the U.K. in the event of a no-deal Brexit, CEO Tom Enders said. (Paul Thomas/Bloomberg)

“Bombardier has been advocating for an orderly Brexit,” a spokesperson for Bombardier told CBC News. “This continued uncertainty, and the real prospect of leaving the EU with no deal, does not help with business planning.

“It is imperative that Parliament finds a resolution that works for U.K. business,” the spokesperson said.

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