How will the merger affect local residents?
Algonquin Power & Utilities Corp. is a $4.8 billion North American diversified generation, transmission and distribution utility located in Oakville, Ontario. Empire will continue to be based in Joplin, and according to a February press release, the APUC will retain all existing Empire employees and the current management team within the Liberty Utilities umbrella.
According to the release: “Liberty Utilities has pledged that Empire will maintain its historic levels of community involvement and charitable contributions and support in its existing service territories.”
The release said customer rates will not be affected by the transaction.
JOPLIN, Mo. - It's been nearly a year since the initial announcement was made, but the Kansas Corporation Commission formally signed off on the merger between Canadian-based Algonquin Power & Utilities Corporation and The Empire District Electric Company. Receipt of the KCC’s order completes the final required regulatory approval and accordingly, all conditions precedent to completing the Merger have been fulfilled other than the customary closing conditions. The KCC approved the Merger at its meeting on Dec. 22, and the final transaction closing is expected to occur on or about Jan. 1, 2017.
“We are very pleased with the KCC’s approval of APUC’s acquisition of Empire," said Ian Robertson, Chief Executive Officer of APUC. "We recognize and are grateful for the significant efforts of all parties who participated in this regulatory process. We are committed to ensuring Empire remains a strong, locally-based, customer focused utility. This transaction combines the strengths of two great companies, and we look forward to pursuing the many opportunities resulting from the merger."
The companies first made the announcement of the merger this past February. Upon closing, Empire will become a wholly-owned subsidiary of Liberty Utilities and will cease to be a publicly-traded corporation. According to Empire's Director of Corporate Communications Julie Maus, the move should be seamless.
"With the approval from the KCC we have cleared the final regulatory hurdle necessary to consummate our transaction with APUC," Brad Beecher, Empire’s President and Chief Executive Officer said. "It has taken significant effort of a number of parties to reach this successful conclusion. Empire remains committed to providing reliable and responsible services to our customers, a rewarding environment for our employees, and a continuing level of community support and involvement."
Just prior to the announcement, Empire's Board of Directors declared a special pro-rated dividend in preparation for the expected closing of the merger with Liberty Sub Corp., pursuant to the Agreement and Plan of Merger among the Company, Liberty Sub Corp. and Liberty Utilities (Central) Co., an indirect subsidiary of Algonquin Power & Utilities Corporation.
The board of directors declared a dividend of $0.002857 per share, per day that will accrue from Dec. 1, 2016 (the prior dividend record date), until and including the day prior to the effective day of the merger, or until the next regularly scheduled record date of March 1, 2017, whichever occurs first. The pro-rated dividend is the daily equivalent of the current quarterly dividend rate of $0.26 per share. This dividend will be payable as soon as practicable, following completion of the merger to shareholders of record at the close of business on the last trading day prior to the effective day of the merger. In the event the Merger does not close by March 1, 2017, the next regularly scheduled record date, a regular quarterly dividend of $0.26 per share will be paid on the normal quarterly dividend payment date of March 15, 2017, to shareholders of record as of the close of business on March 1, 2017.
On Dec. 21, the day prior to the KCC's approval, Empire filed a request with the Oklahoma Corporation Commission (OCC) for an increase in annual revenues of $3.8 million or 27.58 percent. If approved, a residential customer using 1,000 kilowatt hours monthly would see an increase of about $37, or about 36 percent.
The filing incorporates a cost of service study designed to reflect the actual cost to serve customers through changes in the proposed customer charge and overall rate. For residential customers in Oklahoma, the request seeks to increase the monthly customer charge from $12.50 to $20.59. Primary drivers for this case include the $112 million Air Quality Control System (AQCS) at the Asbury Power Plant, the $168 million combined cycle generating unit at the Riverton Power Plant; upgrades to financial, asset, and work management software systems; and other reliability and system improvements to serve customers.
In the coming months, the OCC will perform an extensive audit of Empire’s operations hold public hearings, and conduct an evidentiary hearing. Any new rates granted would take effect at the conclusion of this process, typically in approximately six months. Empire’s filing on Dec. 21 came after previous efforts to raise customer rates by nearly 46 percent using an OCC reciprocity rule that was halted by push back from Oklahoma customers.
"Since 2011, approximately $670 million in capital improvements have been completed to serve Empire customers, which are not yet included in Oklahoma rates," Beecher said. "The largest of these investments were the Asbury AQCS and the Riverton Combined Cycle Unit. These projects were the most economic options for Empire to comply with environmental mandates related to SO2, mercury, and particulate matter. These investments also provide economic benefits for the region while lowering emissions and protecting the environment."