A one-time special dividend of $29.9 million was paid to Fortis Friday by Newfoundland Power. Fortis, owner of all common shares of Newfoundland Power, received the payment as the result of Newfoundland Power selling joint-use poles.
The deal was months in the making, and had the power company locking horns with the Board of Commissioners of Public Utilities (PUB).
It began in 2001, when Newfoundland Power and Bell Aliant partnered on a 10-year agreement to have existing utility poles owned and maintained by Newfoundland Power, with both companies sharing use. The two shared the ownership costs 60-40, with 60 per cent paid by Newfoundland Power.
It ultimately came down to accounting and paperwork, said advocates, with full ownership cutting back on billing disputes and the need to collect “tons of detail with little value” about the poles for the benefit of co-owners.
The deal was struck.
In June 2010, Bell Aliant notified Newfoundland Power it would be exercising its right to not renew.
The two companies developed a new plan for the poles, beginning with the sale of 40 per cent of the poles back to Aliant.
However, when Newfoundland Power submitted a request for approval of the sale to the Newfoundland and Labrador Board of Commissioners of Public Utilities, on Feb. 4, the application was denied.
The submissions made show strong feelings all around as to where the boundaries of the PUB’s power stands.
Newfoundland Power argued for, as was written into the 2001 deal, Bell Aliant’s right to repurchase its pole ownership. “And the Board, while it has an oversight duty here, can’t simply willy nilly say ‘look, we don’t like this and we’re going to exercise our powers in a manner that will frustrate Bell Aliant’s right of reacquisition,’” reads a section of transcript credited to a representative for Newfoundland Power.
The PUB, meanwhile, referred to the deal as “fully reviewable.”
“The Board acknowledges that Newfoundland Power has contractual obligations to Bell Aliant and trusts that Newfoundland Power has acted in good faith in fulfilling its obligations,” read a statement by the PUB. “The Board is not subject to these contractual obligations and, instead, is obliged to fulfill its jurisdiction, in accordance with the (specific) legislation.”
Consumer Advocate Thomas Johnson took part in the PUB case as an intervenor.
“I objected to the sale because I didn’t believe the sale terms were of benefit to customers and I thought there was a potential that customers would be worse off,” Johnson told The Telegram Wednesday.
“The Board actually agreed with that and did not approve the sale, so then Newfoundland Power went back to the negotiating table with Bell Aliant and came up with a new arrangement with them and they reapplied to the board and then, once I saw there were benefits for customers, I no longer objected to the sale.”
In their second proposal, Newfoundland Power and Bell Aliant agreed to extend the term of their new joint-use agreement from five years to 10 years, have Newfoundland Power provide pole installation and removal services for Bell Aliant though 2020 (consolidating the logistics, record and execution of that work under a single entity) and extend the term of the purchase agreement.
The changes were considered significant and, on Sept. 28, the PUB granted its approval.
Johnson agreed with the move.
“The new, revamped deal provides millions of dollars worth of benefits to customers,” Johnson said.
It also allowed for a special dividend payment by Newfoundland Power.
Johnson characterized the entire affair as a victory for regulatory oversight. “That really improved the picture for customers. So it was an instance, in my view, where the regulatory oversight process produced benefits.”
Documents chronicling the process can be found on the PUB website.