Northeast Utilities has revamped its economic development approach to more closely align with the policy used by merger partner NStar, a step that includes laying off three pillars of the Connecticut economic development community. Their former responsibilities are now under the ultimate purview of two Boston executives.
NU insists the changes are an improvement and the top Connecticut official in charge of monitoring the utility parent company’s actions post-merger consents to the philosophical change.
But the reorganization worries many Connecticut community and economic development organizations, who receive a large portion of their funding from NU and are wary of new relationships with new people.
“Everybody I know is gone,” said Lyle Wray, executive director of the Connecticut Capital Region Council of Governments. “This is one of those big deal, behind the curtain things.”
As a result of the consolidation following NU’s April merger with Boston-based NStar, the company is folding its economic development department into its community relations department.
Previously, NU had a department of four people specializing in economic development. The four would work with individual cities and towns, regional and state organizations, and other New England states to entice businesses and jobs into its service territory. Now, the corporate approach is similar to that of NStar, where a department of 16 employees is assigned to individual Connecticut municipalities to deal with a wide range of community relations issues, including economic development.
“Our commitment to economic development is unwavering. As a result of our organizational restructuring, we’ll be able to devote more staff to support our commitment to economic development than we did before,” Lara said.
In eliminating the department, NU laid off three major players in the Connecticut community: David Driver, NU project manager for system recruitment, who had been with the company since 2003; Douglas Fisher, manager of NU economic development and community relations, who had been with the company since 1995; and Thomas Marano, NU business development manager, who had been with the company since 2001.
“Those are some heavy hitters in economic development in this region,” Wray said. “They are a very quiet presence that had a very large economic development impact on Connecticut and western New England.”
Developers often would go to NU for assistance or financial support even before asking for help from the state.
In its merger regulatory consent agreement with Connecticut officials, the merged NU agreed to maintain its level of funding for community and charitable organizations for at least seven years — a promise the company still intends to fulfill, Lara said.
While the amount of funding may remain the same, the company doesn’t have to fund the exact same organization with the same amounts. Connecticut officials who talked with the leaders of the new NU community relations team were told the department doesn’t have a budget yet and has yet to prioritize which groups will receive funding.
“The new (NU) organization sounds like it could work out very well, but they did lose an incredible amount of institutional knowledge when they let go Dave Driver, Doug Fisher, and Tom Marano,” said Patrick McMahon, director of economic and community development for Suffield.
With Driver, Fisher, and Marano, the NU economic development department founded and/or was the major funder of many Connecticut and western New England organizations including the Connecticut Economic Resource Center, Bradley Development League, seCTer, MetroHartford Alliance, the Hartford-Springfield Economic Partnership, Team New England, and the Connecticut Main Street Center.
“Some of the people that the utility has let go had longstanding relationships not only with local officials but state officials and the private sector — relationships that are going to be impossible to duplicate,” said Jim Finley, executive director and chief executive officer of the Connecticut Conference of Municipalities.
For example, Marano was on the Connecticut Main Street Center board and served on the operations committee for the Bradley Development League. Driver was the principal contact for the Hartford-Springfield Economic Partnership and Team New England.
“We have been blessed in NU taking a big role in economic development on a regional basis,” said Jim Burke, economic development director for Windsor and member of the Bradley Development League operations committee, who said he communicated with the NU department on a weekly basis. “Now, it is kind of a shock that a major utility company would not have a role in economic development.”
Team New England was held together by NU, particularly Driver, and worked to entice new businesses to the region, Wray said. The organization is a loose cooperation between various officials in the six regional states, and Driver was the glue getting them to work in conjunction.
“Team New England did a whole rash of stuff that nobody else did,” Wray said. “They had a huge impact. They weren’t noisy, but they were important.”
When contacted, Driver, Fisher, and Marano either did not respond or declined to be interviewed for this article.
Finley said the trio was very helpful to cities and towns by hosting various conferences and meetings with municipal officials on matters pertaining directly and indirectly to utilities, including smart growth and education reform.
“It seems the new management is going to take a step backward from people in NU playing an upfront role in convening officials from around the state,” Finley said. “I’d be concerned that we lose that touch.”
NU’s merger with NStar created New England’s largest utility parent company with 3.5 million customers across six natural gas and electric subsidiaries in three states including Connecticut Light & Power and Yankee Gas, both based in Berlin. NU went from being headquartered only in Hartford to having dual headquarters in Boston and Hartford.
NStar’s pre-merger leader, Tom May, is the president and CEO of the merged company, while the pre-merger leader of NU, Charles Shivery, is non-executive chairman until he retires next year.
In addition to the nonprofit funding, NU’s agreement with Connecticut officials signed to gain regulatory consent for the merger calls on the company to maintain its headquarters, principal board, executive offices, functions, and staff in Hartford for seven years.
Attorney General George Jepsen said the state expected these types of layoffs and consolidations as a result of the merger, and NU in no way is violating its merger agreement with the state.
“Job losses and restructuring across the company come as no surprise; indeed the whole premise of the merger was to achieve synergies by eliminating the duplication of services. The settlement agreement does not prohibit employee reductions, but it does provide specific protections for linemen and service-related employees,” Jepsen said. “NU represented to our office that its economic development department is not being eliminated, but is being placed within its community relations department, where a larger team will be available to respond to requests for assistance.”
Officials at the Connecticut Department of Economic & Community Development met with NU, and DECD is hopeful the company provides the same level of support as the past, said department spokesman Jim Watson.
“It is our feeling and understanding that NU is committed to support us in our economic development efforts moving forward,” Watson said.
The difference post-merger is instead of NU economic development being led locally by a staff with decades of experience in the western New England business landscape, the ultimate leadership of the new department will come from two executives whose experience outside of Boston is limited.
The 16-person community relations department based in Connecticut will be run by a Connecticut manager, Angela Ruggiero, who has been with pre-merger NU since 2001. This setup is similar to NU’s community relations in Massachusetts and New Hampshire. The makeup of the Connecticut department includes John O’Toole, the lone holdover from the economic development department.
Ruggiero and the rest of the Connecticut team reports to Bill van Dam, NU director of community relations, and his superior, Jim Hunt, NU vice president for regulatory affairs and community relations — both Boston-centric executives.
Van Dam has been with NStar since 1998, most recently serving as director of credit, collections, revenue assurance, and field service before taking over as community relations director post-merger. Hunt — before being named NU vice president for regulatory affairs and community relations on Oct. 1 — served as the chief of environment and energy for the city of Boston for seven years, and as assistant secretary for the Massachusetts Executive Office of Environmental Affairs for seven years before that.
NU officials declined to make van Dam and Ruggiero available for this story.
Despite the switch in economic development leadership, NU insists it is not becoming a Boston-centric company, which was a fear in Connecticut pre-merger and why the regulatory approval agreement includes the clause about the company maintaining a headquarters in Hartford.
“Absolutely not,” Lara said. “We are committed to keeping a balance in the administration of the company.”
The NU president/CEO is from NStar, but the rest of the executive team is a mix of the two companies, as is the board of directors, Lara said. The company alternates locations for its executive and board meetings.
Following the layoffs of Driver, Fisher, and Marano, the Connecticut Economic Development Association wrote a letter to Tom May expressing concern about the changes.
“Within a week of us sending that letter, Bill (van Dam) came down and met with us personally, which, in my mind, is a fantastic start,” McMahon said.
McMahon said he and other core economic development officials had a very productive meeting with van Dam, Ruggiero, and O’Toole, on the new department structure.
McMahon said he and the others offered to reconvene the entire Connecticut Economic Development Association board of directors to meet with the NU group and made recommendations for which Connecticut groups should receive NU economic development funding once the budget is established.
“They have to be parties with us,” McMahon said. “NU is too big of a player.”
The changes in economic development will take some getting used to, said John Simone, president and CEO of Connecticut Main Street Center. The people that founded his organization are gone, and now Simone must sit down with the new people and the old people in new positions to sort out the new relationship.
“NU is the only private company in the country that started its own Main Street organization internally with their own employees,” Simone said.
NU founded Connecticut Main Street in the 1990s and spun it off as a nonprofit in 2000. NU still provides the majority of financial support and in-kind office space. The organization brings more businesses and people into downtowns, helping the utility by increasing use of its existing infrastructure and therefore increasing revenues.
Since June 2007 — the peak before the recession — Connecticut Main Street grew new businesses 20 percent and new jobs 25 percent in the areas it served, well above the state averages, Simone said.
“It is a good time to be doing what we are doing, not only for CL&P and NU, but also for Connecticut,” Simone said. “I hope that is a message NU continues to believe in as we get to know each other again.”
