The Federal Energy Regulatory Commission last week approved themerger of BEC Energy and Commonwealth Energy System, setting thestage for the combined company to become one of the largest energyproviders in the state of Massachusetts.

With the merger, which is expected to be completed in August,the new company will become the second largest electric provider inthe state behind Massachusetts Electric, serving 1.3 millionelectric and natural gas customers. “Being bigger means beingbetter able to serve our customers, being better able to compete,”said Michael Monahan, a spokesman for BEC Energy utility, BostonEdison.

The deal calls for BEC Energy and Commonwealth Energy, whichowns three public utilities in the state, to become wholly-ownedsubsidiaries of a new holding company to be named NSTAR. The newcompany would be headquartered in Boston [EC99-33].

The transaction has a market capitalization of $4.4 billion, andis expected to result in more than $540 million in customer savingsover a 10-year period, according to Monahan. The merger stillawaits the approval of the Nuclear Regulatory Commission and theSecurities and Exchange Commission. Also, Massachusetts regulatorsmust give their blessing to a combined rate plan.

In addition to Boston Edison, BEC Energy owns Harbor ElectricEnergy, which provides distribution service in the state, andBoston Energy Technology Group, which is engaged in non-regulatedenergy businesses. Commonwealth Energy owns Commonwealth Electric,Cambridge Electric Light and Canal Electric. It also is parent ofCOM/Energy Marketing, a power marketer, and two gas companies -Commonwealth Gas, a distributor, and Hopkinton LNG Corp., whichowns and operates two liquefied natural gas facilities.

FERC said the combination of BEC Energy and Commonwealth Energyposed no competitive concerns. The companies have divestedthemselves of all their generation assets, said Monahan. The newcompany will be “just wires and pipes’ delivery.”

Susan Parker

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