The $3.2 billion acquisition of Altalink LP, one of Canada’s largest transmission companies by Warren Buffet’s Berkshire Hathaway Energy Company, was approved on Friday by the Alberta Utilities Commission (AUC).
The Alberta regulator for the utilities sector, natural gas and electricity markets determined that the acquisition would create “no harm” for customer service or power rates.
The AUC said it found that customers “will at be at least no worse off after the transaction is completed and that the no harm test has been satisfied.”
“The commission considered the purchase price to represent the market price for the AltaLink transmission business and assets at the time of the conclusion of the purchase price negotiations. The purchaser has been unequivocal that it will not seek to recover what has been described as a purchase premium in any manner that would have a direct impact on the future costs included in utility revenue requirement and hence the rates charged to customers.”
About 85% of Albertans get their electricity from Altalink.
AUC’s is the final of three approvals required for the transaction to go ahead, the other two were received earlier in 2014 from the federal government.
“We are pleased with the decision of the AUC. We expect the transaction to reach financial close as soon as possible.”
Calgary-based Altalink is one of the biggest transmission companies in Canada. It is responsible for about 12,000 kilometers of transmission lines and 280 substations in the province of Alberta, delivering electricity to approximately 85% of the province’s population. It is a fully-owned subsidiary of Montreal-based SNC-Lavalin.
Altalink owns more than half of Alberta’s transmission grid.
SNC-Lavalin had announced in May that it intended to sell Altalink to Mr. Buffet’s company. It won federal approval in July.
According to credit rating agencies, the transaction is deemed to be neutral or beneficial to the cost of debt.
Altalink’s current management expertise and capabilities will not change and may benefit from the acquisition, AUC believes.