ConEd Says DPUC Decision Threatens NU Merger
Consolidated Edison said last week the Connecticut Department of Public
Utility Control's (DPUC) conditional approval last week of its merger with
Northeast Utilities could kill the transaction (see NGI, Oct.
"We intend to ask the Connecticut Department of Public Utility
Control (DPUC) to reconsider its decision. Although some changes were made
to the draft decision, the DPUC order is not materially different from
the draft and is substantially different from anything that we had any
reason to expect from the DPUC. Unless this order is substantially modified,
it so significantly changes the economic effects and risks of the merger
that it calls into serious question whether the transaction will be completed.
We will reserve final judgment until we are able to assess the full effect
of the final regulatory actions," the company said.
According to the decision, ConEd must pay an "acquisition premium"
of $1.5 billion on top of the $3.8 billion purchase price. In addition,
within 60 days of the merger completion, Connecticut Light & Power
(CL&P), a subsidiary of NU must reduce rates by 3%, or $45 million
over three years. Those rates must remain in effect until Jan. 1, 2004.
Other terms include requiring NU's subsidiary headquarters to remain in
Connecticut and allowing no involuntary layoffs for two years after the
merger. The department said it imposed the conditions to help protect service
reliability and availability throughout New England.
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