National Grid and KeySpan Corp. submitted their merger plan to FERC on Thursday, promising no adverse impacts on the wholesale energy market nor any cross subsidization from regulated to unregulated operations from the $7.3 billion combination, which would create the third largest gas and electric utility company in the United States.
They said the deal is consistent with the public interest and addresses key concerns FERC has had in reviewing similar transactions. The filing includes an analysis by an independent economist of the competitive impacts of the merger. FERC approval is required for the transaction to close, which is expected in early 2007. The application requests a FERC decision by late October.
On Feb. 27, National Grid announced plans to pay $42 per share in cash for KeySpan. The combined company is expected to have an enterprise value of $11.8 billion. The boards of both companies have approved the deal, which is National Grid's fifth U.S. purchase. The combined company will serve nearly eight million customers in New York State and New England.
In the U.S., National Grid currently transmits and distributes electricity and gas to nearly four million customers in Massachusetts, New Hampshire, New York and Rhode Island. The UK-based company previously acquired New England Electric & Eastern Utilities Associates and Niagara Mohawk. It also recently announced that it will buy the Rhode Island gas distribution business of Southern Union.
National Grid owns the high-voltage electricity transmission network in England and Wales and operates the system across Great Britain. It also owns and operates the high-pressure gas transmission system in Britain and serves over 11 million meters in homes and businesses in Britain through its gas distribution business.
KeySpan operates regulated gas utilities in New York, Massachusetts, and New Hampshire that serve 2.6 million customers. The company also is the largest electric generator in New York State, serving the 1.1 million Long Island Power Authority (LIPA) customers and operating LIPA's transmission and distribution system under contract. KeySpan serves about 25% of the power needs of New York City. It also owns 20.4% of the Iroquois Pipeline, has a 50%
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