The proposed merger of Northeast Utilities and NSTAR, which would create one of the country’s largest utilities serving 500,000 natural gas customers as well as three million electric customers, would harm competitive energy markets in New England, according to the New England Power Generators Association (NEPGA).
“NEPGA believes that without appropriate safeguards for the competitive markets, the proposed merger will substantially and adversely impact the Commonwealth’s competitive electricity marketplace and roll back consumer protections, efficiency improvements and environmental benefits that have been painstakingly achieved over the past 10 years,” said NEPGA President Angela M. O’Connor.
In a petition to intervene as a party in the Massachusetts Department of Public Utilities (DPU) review of the proposed merger, NEPGA said it would oppose the deal. NEPGA intends to make similar filings in Connecticut, New Hampshire and Maine.
The proposed merger would create a utility with an enterprise value of $17.5 billion. When the deal was announced last year, the merger partners said they planned to invest $9 billion in New England’s energy infrastructure over the next five years (see Daily GPI, Oct. 19, 2010).
NEPGA, whose members’ plants represent 85% of all generating capacity in New England, objects to the combined company pursuing rate-base investments in generation, O’Connor said.
“Such intentions run contrary to the principle of competitive procurement and, if carried out, would create significant impediments to innovation and private investment in both traditional and renewable energy in New England,” she said.
NEPGA also believes that the merger as proposed may inhibit alternatives to ratepayer-funded transmission projects, and “could drag New England back to a time when electricity was both produced and provided by a monopoly, as opposed to today’s more efficient competitive market, if the merged entities were to return to ratepayer-guaranteed investment in generation.”
The proposed merger is subject to shareholder approval and antitrust review as well as reviews by the DPU, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Securities and Exchange Commission and the Federal Communications Commission.
If approved, the deal would create a combined company that would be called Northeast Utilities that would operate six regulated electric and gas utilities in three states, and would have nearly 4,500 miles of electric transmission lines, 72,000 miles of electric distribution lines and 6,000 miles of gas distribution lines.
NSTAR shareholders would receive 1.312 Northeast Utilities common shares for each NSTAR share that they own in a transaction with a total equity value of $9.5 billion. It is anticipated that Northeast Utilities shareholders would own approximately 56% and NSTAR shareholders would own approximately 44% of the combined company.
The combined company would have a rate base of $10.8 billion. Fifty-four percent of that would come from electric distribution; 31% would come from electric transmission; 4% would come from power generation; and 11% would be from gas distribution.
Hartford, CT-based Northeast Utilities operates New England’s largest utility system with annual revenues of $5.4 billion and assets of $14.2 billion. Its companies in Connecticut, New Hampshire and Massachusetts serve more than 2.1 million electric and natural gas customers in nearly 500 cities and towns. NSTAR, headquartered in Boston, has annual revenues of $3 billion and assets of $8 billion and serves 1.4 million customers in Massachusetts, including approximately 1.1 million electric distribution customers in 81 communities and 300,000 natural gas distribution customers in 51 communities.
On Monday Duke Energy said it plans to acquire Progress Energy Inc. in a $13.7 billion stock deal that would create the country’s largest utility, serving 7.1 million power customers in six regulated territories (see related story).
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