Reversing a year-old decision, Connecticut regulators decided Wednesday afternoon to conduct a formal review of the $4.7-billion merger between Hartford-based Northeast Utilities and Boston-based NStar.
The decision Wednesday was an initial draft decision that won’t be finalized until Jan. 18. Northeast Utilities has not decided yet whether it will contest the decision to review the merger, NU spokesman Al Lara said.
The timing of a formal review by Connecticut regulators throws the entire transaction in jeopardy. NU and NStar self-imposed an April 16 deadline to complete the merger, and a similar official review by Massachusetts regulators is heading into its 16th month.
However, Lara said NU is confident the Connecticut review will be completed in a timely manner. Even though the state Public Utilities Regulatory Authority initially decided on June 1 not to review the merger, NU and NStar have provided PURA with all the merger documents given to other federal and state reviewing agencies.
“They are very familiar with our merger case,” Lara said. “They are acutely aware of the tight deadlines we have.”
PURA initially decided last year the agency didn’t have the jurisdiction to review the merger because the transaction wouldn’t impact the make-up or leadership of NU’s two Connecticut subsidiaries: electric utility Connecticut Light & Power and natural gas utility Yankee Gas, both based in Berlin.
However, NU and CL&P have come under governmental and public scrutiny after widespread power outages following storms in August and October. Connecticut Attorney General George Jepsen and the Office of the Consumer Counsel intensified their call for a formal Connecticut review of the merger following the storms; and in December, power plant operator NRG Energy, Inc. filed a petition with PURA saying the poor CL&P response to the storm necessitated a formal review.
“While this new draft decision is a very positive step, I will ask the PURA to incorporate a critical further protection in its final decision – an order that the merger may not occur before PURA completes its full review and issues a final decision. Connecticut’s consumers deserve a meaningful, thorough review process. It is important that the review look not only at how the new company will be structured and how it will operate, but also determine what conditions need to be in place to ensure NU’s Connecticut customers share in any benefits,” Jepsen said in a released statement following Wednesday’s decision.Â
On Wednesday morning, PURA decided it had cause to reopen the closed jurisdiction case; and on Wednesday afternoon called for a formal review of the merger.
NU and NStar have received the majority of the necessary approvals for the merger, including from their shareholders, the U.S. Securities and Exchange Commission and the Nuclear Regulatory Commission, which gave its approval Dec. 20.
The only remaining approvals needed now are PURA and the Massachusetts Department of Public Utilities. NU and NStar have come under heavy fire in its Massachusetts DPU review, particularly from the Massachusetts Department of Energy Resources, which wants the companies to commit to greater environmental sustainability, such as buying power from the proposed wind farm off Cape Cod.
Despite the delays in Massachusetts, NU reassured its shareholders as late as December that the merger would be approved sometime in the first quarter.
How the Connecticut review impacts that decision will be determined after Jan. 18. After PURA finalizes Wednesday’s draft decision, the agency will develop a docket and procedural schedule to finish its review.
In the draft decision, PURA said it will move as quickly and efficiently as possible to finish ahead of the April 16 deadline while giving the merger review its due attention.
“The Authority is mindful of certain milestones relating to the completion of the proposed merger and will dedicate all necessary staff resources to achieve a complete and thorough regulatory review consistent with that time schedule,” PURA said in the draft decision.
If complete, the NU/NStar merger will create New England’s largest utility parent with six electric and natural gas subsidiaries and 3.5 million customers in Connecticut, Massachusetts and New Hampshire.
