The merger between Niagara Mohawk Holdings Inc. and UK-based National Grid Group plc was completed Thursday, putting the combined utility company at the forefront of the New York-New England market. The $3 billion Niagara Mohawk merger was first announced in September 2000 (see NGI, Sept. 11, 2000) and received final regulatory approval earlier this month.

“Through the combination of our two great companies, we will be able to deliver to Niagara Mohawk customers almost $1 billion in savings over the next 10 years,” said Rick Sergel, CEO of National Grid USA. Niagara Mohawk’s residential customers will see on average an 8% delivery price reduction for electricity, which will be reflected in bills beginning Feb.1.

Niagara Mohawk President William F. Edwards said customers will continue to contact Niagara Mohawk using the same customer service and emergency phone numbers or by accessing the company’s web site, www.NiagaraMohawk.com . The company’s operating headquarters will remain in Syracuse, NY, and the company will now be known as “Niagara Mohawk, a National Grid Company.”

“We are pleased that Niagara Mohawk’s merger with National Grid brings immediate and long-term benefits to our customers,” Edwards said. Under the new company, he is now is responsible for the electricity and natural gas distribution business across the company’s New York service area.

The 8%, $152 million annual delivery rate reduction will be applied to a residential customer’s entire electricity bill — which also includes the cost of electricity purchased — resulting in the net savings of approximately 5% on average, Edwards said. The company also will extend a multi-year gas rate settlement by 16 months, resulting in gas delivery rates — unchanged since 1996 — remaining the same through December 2004.

National Grid said that William E. Davis, Niagara Mohawk’s chairman and CEO, will remain with the merged companies for two years as chairman of National Grid USA and a director of National Grid Group plc. Darlene D. Kerr, former president of Niagara Mohawk, now is president of National Grid USA Service Company and senior vice president and a director of National Grid USA.

According to National Grid, the addition of Niagara Mohawk’s assets more than doubled the size of its U.S. operations, creating the largest transmission network and distribution business in the New York/New England market and the eighth largest electricity utility in the US. The newly combined companies will serve more than 3.3 million customers.

Niagara Mohawk is National Grid Group’s third U.S. acquisition, after New England Electric System (NEES) and Eastern Utilities Associates (EUA), both of which were acquired in 2000.

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