Hydro One, Avista end merger after U.S. state regulators reject deal

(Adds details on regulators rejection of deal, Avista's share movement)

Jan 23 (Reuters) - Canadian electric utility Hydro One Ltd and its U.S.-based rival Avista Corp agreed to terminate their merger after failing to receive regulatory backing.

Hydro One proposed to buy Avista for C$6.7 billion ($5.02 billion) in 2017 to help expand into the U.S. Northwest.

However, the Washington Utilities and Transportation Commission rejected the deal in December, saying it would not adequately protect Avista or its customers from political and financial risk. The Ontario provincial government owns about 47 percent of Hydro One.

And in January, the Idaho Public Utilities Commission rejected the deal.

A petition to reconsider the decision was also denied by the Washington state regulator in early January.

Hydro One said on Wednesday it would pay Avista $103 million in termination fees.

Shares of Avista were down 1.3 percent at $40.52 in extended trading. (Reporting by Soundarya J in Bengaluru; Editing by Sai Sachin Ravikumar and Sriraj Kalluvila)