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ConEd Says DPUC Decision Threatens NU Merger

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. 2).

"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.

Alex Steis

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