Seeking to clear the last hurdle with Washington state regulators, Puget Sound Energy (PSE) on Tuesday touted 10-year benefits of $100 million to its utility customers from a proposed merger with a private consortium led by Macquarie Capital Group and including Australian and Canadian investors.

PSE made the claim in a filing with the Washington Utilities and Transportation Commission (WUTC) in its ongoing case reviewing the proposed $7.4 billion deal to take the Bellevue, WA-based utility private. The utility and its proposed new backers said they made the filing to “correct inaccuracies” that might have been created by some of the intervenors in the case, along with further outlining what they see as the immediate customer benefits of the merger, which include substantial infrastructure investment. The WUTC is expected to make a decision by September.

“Customer benefits include tangible rate credits and meaningful service improvements, capital infusions to strengthen the utility, and if required, limitations on distributions of earnings,” they told the WUTC. “The filings also include additional commitments to continue PSE’s aggressive approach to renewable energy and to PSE’s green power and energy efficiency programs. PSE also agrees to set a goal to be carbon neutral by 2050.”

The filing makes the commitment to take “significant steps above and beyond the ‘no-harm’ standard for merger approval,” resulting in $100 million in rate credits and reduced costs ($10 million annually over a 10-year period). The emphasis is on the fact that PSE’s same management will continue to run the utility, but post-merger that management will have what the consortium called “new, reliable and patient capital.”

The buyout consortium being led by a North American unit of Australian-based Macquarie Bank Ltd. has assured federal and state regulators that it will provide the estimated $5 billion in capital investment PSE needs over the next five years to upgrade its electric and natural gas infrastructure that serves more than 1 million electricity and 800,000 natural gas customers. Those and other assurances were made in written testimony filed with the WUTC Wednesday.

PSE CEO Stephen Reynolds called the Macquarie-led consortium, which includes a Canadian public pension fund, “a group of patient investors who have listened and taken seriously the issues raised by interested parties.”

The Federal Energy Regulatory Commission (FERC) last April gave conditioned approval to the deal, bowing to the conditions of the WUTC, unless on further examination it finds they are “inadequate.” In that regard, FERC reserves the right to impose other conditions after state regulators have acted. The commissioners made clear they were interested in ring-fencing provisions that would protect the utility finances from other activities of the investment group (see Daily GPI, April 18).

“The investors are willing to go the extra mile to demonstrate their long-term commitment to our customers and make sure our local management team and employees succeed in improving customer service,” said Reynolds, adding that they are sensitive to rate, infrastructure and energy supply needs facing the utility.

In June PSE, the utility of Puget Energy, announced that it would retain key local board members and utility management following the merger (see Daily GPI, June 16).

Reynolds will remain as PSE president and CEO, serving on both the utility and holding company boards, which will continue to be chaired by William Ayer, CEO of Alaska Air Group, who has served on the Puget boards since January 2005.

The investor consortium is led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corp., along with Alberta Investment Management Corp., Macquarie-FSS Infrastructure Trust and Macquarie Capital Group Ltd.

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