AEL&P parent company agrees to merger with Spokane-based Avista
The parent company of Juneau electric utility Alaska Electric Light & Power has agreed to merge with Spokane, Washington-based Avista Corporation.
Alaska Energy and Resources Company will join Avista subsidiary Avista Utilities by July 2014, pending the approval of state and federal regulators, as well as AERC shareholders.
Bill Corbus and his family have owned a piece of Alaska Electric Light & Power almost from the day the company was founded. His grandfather and a great uncle bought into the utility in 1896, when it was only two years old. His father, William Corbus, was the longest serving company president from 1949 until 1987.
Bill started working for AEL&P in 1970 and went on to serve eight years as president and CEO in two separate stints. Even after he retired in 2002, Corbus and his family remained the majority owners of Alaska Energy and Resources, AEL&P’s parent company.
But Corbus says they’ve reached “a turn in the road” and now is the time to sell.
“I’m 76 years old,” Corbus says. “There is no Corbus family member here to continue to be involved with the company at the board of directors level or as part of the employment team.”
Corbus says there would be inheritance tax obligations if the company is not sold before he dies. He also says several AERC shareholders are looking to sell their stock, and the company wants new sources of capital for future projects to provide energy to its nearly 16,000 customers.
He says AERC wanted a buyer that would focus on three things: Providing reliable and competitively priced electric service; being a good corporate citizen in Juneau; and taking care of AEL&P’s employees.
Corbus says the company had other suitors, but in the end, “the management team and the board of directors decided that Avista was in our case by far the best match.”
Current AEL&P President and CEO Tim McLeod says the two companies have a number of similarities.
“Other than they being much bigger than we are, we felt like we are very similar in corporate values and corporate culture,” McLeod says.
Dennis Vermillion, President of Avista Utilities, sees that too. The company was founded in Spokane in 1889 as part of an effort to build a power station on the Spokane River.
“We’re very much like AEL&P in that we started, really, in a very small community over a hundred years ago, with a foundation of hydroelectric energy,” Vermillion says.
Today Avista serves more than 600,000 customers with electricity and natural gas in Washington, Idaho, Oregon and Montana. Vermillion says Avista sees an excellent growth opportunity in AEL&P.
“A big deal for us, it fits nicely from a strategic perspective in what we’re trying to do,” says Vermillion. “And that is grow our utility business and diversify our energy assets.”
And while he admits it won’t happen for several years, he says there also could be opportunities to grow Avista’s natural gas business in Juneau and beyond.
“There’s been a lot of discussion about CNG, compressed natural gas, and LNG, liquefied natural gas,” he says. “And Tim and I and others have talked about that, and it’s something that we look forward to rolling up our sleeves on and exploring what the opportunities might be, not only for the Juneau area, but all of Southeast Alaska.”
Vermillion says the proposed re-opening of the AJ Mine did not play into the company’s decision to pursue the merger. Another Alaska Energy and Resources subsidiary – AJT Mining Properties – is a part owner, along with the City and Borough of Juneau, of the old mine near downtown.
“We’re a utility company. That’s what we do. We think we’re pretty good at it,” says Vermillion. “And we know there’s a very well-run and good utility company in Juneau, and that’s really what the impetus of this transaction is for us.”
In the immediate future, both parties say there should be no noticeable changes at AEL&P. The company’s headquarters will remain in Juneau, and Avista has promised to retain all of its 60 full time employees for at least two years after the transaction closes.
As for Corbus, he plans to stay on until the ownership transition is complete. And at the very end of Monday’s press conference announcing the deal, he said he has plans for his share of the Avista stock.
“It is my intention to sign over 90 percent of my new Avista shares to the Juneau Community Foundation,” Corbus says.
The community foundation helps donors direct charitable funds to nonprofits in Juneau. It named Corbus Philanthropist of the Year in 2012 for his many years of community giving.
Corbus says he’s not sure how much this gift will total until the sale is complete, but guesses it will be somewhere north of $40 million dollars.
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