EDITOR’S NOTE: This is an updated version of a previous story. This version includes comments from the Massachusetts Department of Energy Resources, which was unavailable for comment until Monday afternoon.
The proposed $4.7 billion merger between Hartford’s Northeast Utilities and Boston’s NStar appears in limbo this week after the Massachusetts state government called for a significant delay in its approval process.
The Massachusetts Department of Energy Resources (DOER) filed a motion in the merger review case to halt the proceedings, so it could take an in-depth look at the two companies and the merger’s impact on ratepayers and environmental goals. That delay would push Northeast Utilities and NStar passed their self-imposed deadline to complete the deal.
“It certainly has the potential to jeopardize the merger,” Northeast Utilities spokesman Al Lara said. “Any delay in the merger at this point wouldn’t serve anybody well.”
The Massachusetts Department of Public Utilities has the state’ final say in the merger case, and will decide on the merits of the DOER filing. Both the DPU and DOER are organized under the Massachusetts Executive Office of Energy & Environmental Affairs, part of Gov. Deval Patrick’s administration.
The DPU previously granted approval of another DOER motion, which was to hold the NU-NStar merger to a higher standard than all other previous utility mergers.
This latest DOER motion, filed on Thursday, calls for an in-depth review of all rate changes that will result from the merger; a merger integration plan documenting the costs and benefits, including to greenhouse gas emissions; and a study of the foreseeable climate change impacts.
“These are very important points that need to be addressed,” said DOER Commissioner Mark Sylvia.
NStar and NU have received all the necessary approvals for the merger, except the Massachusetts DPU and the Nuclear Regulatory Commission. Earlier this month, the Federal Energy Regulatory Commission gave its blessing, adding to previous nods from the companies’ shareholders and the U.S. Securities & Exchange Commission.
Connecticut’s Department of Public Utility Control decided not to review the merger, saying its authority doesn’t cover holding companies, only regulated utilities. But the Connecticut Office of Consumer Counsel sued in June to reverse the DPUC decision.
“Announcing a request like this nine months after the merger is filed is unprecedented,” NStar spokeswoman Caroline Allen said. “In reality, this latest filing by DOER could ultimately jeopardize the merger.”
DOER filed the motion only after NStar and Northeast Utilities failed to provide enough information in previous requests about rates and environmental goals, Sylvia said.
In the agreement between Northeast Utilities and NStar, if the merger is not complete by April 16, the deal is essentially dead.
When they first announced the merger in October, the two companies initially planned on having all the necessary approvals in place by mid-2011. That date was pushed back to late September after Massachusetts DOER made other demands of the two companies, Allen said.
If DOER is successful in this latest motion to delay the proceedings, final completion of the merger will be push back at least another six months, Allen said.
The intent of the DOER filing is not to stop the merger, Sylvia said. This is the first utility merger since Massachusetts started holding itself to a higher environmental standard; and the precedent needs to be set for all future utility mergers.
“This is an important process that we are following here,” Sylvia said.
If completed, the merger would create a new company called Northeast Utilities with 3.5 million customers in Connecticut, Massachusetts and New Hampshire. The company would have four electric and two natural gas subsidiaries, including Berlin-based Connecticut Light & Power and Yankee Gas.
