The proposed merger of Hartford-based Northeast Utilities and Boston-based NStar will trim $780 million from their combined operations over the next decade, according to their regulatory filing Friday with Massachusetts utility regulators.
The estimated savings will come from consolidating systems, improving processes and cutting the labor force. NStar and NU expect to eliminate 350 positions within five years of the merger’s completion through attrition and retirements, according to the filing to the Massachusetts Department of Public Utilities.
No companywide layoffs are planned, and the two utilities said they will honor all union contracts.
The merger would create the largest utility holding company in New England with 3.5 million customers in Connecticut, New Hampshire and Maine. NStar and NU have six natural gas and electric subsidiaries including Connecticut utilities Yankee Gas and Connecticut Light & Power.
The merger must clear a number of regulatory hurdles to be approved, and analysts consider the Massachusetts DPU approval to be the hardest one to get. Officials at the Connecticut Department of Public Utility Control are weighing requests from legislators and the state attorney general that the DPUC review the merger, but no decision has been made.
Shareholders of both companies approved the merger on March 4. The merged company will be called Northeast Utilities.
If all other approvals are met, the merger is expected to be complete in the third quarter.
NU and NStar had a combined $6.5 billion in operating expenses in 2010, according to their respective annual reports filed with the Securities and Exchange Commission. The proposed savings after the merger equates to 12 percent of those operating expenses.
“This merger is the right decision for customers, employees and shareholders now and into the future,” said NStar Chairman, President and CEO Thomas May, who becomes CEO of Northeast Utilities after the merger.
The Massachusetts DPU filing came after the regulatory agency ruled in March the proposed $4.3 billion merger would be held to a tougher standard, requiring the two companies show the net benefit to customers in the transaction, as opposed to the old “no net harm” standard.
In their response filing, NU and NStar highlighted their eco-friendly efforts, such as signing long-term contracts with wind developers, building six megawatts of solar generation in western Massachusetts, and building a transmission line into Canada to bring in low-carbon electricity.
