Conn. set to review NStar, Northeast Utilities combination, possibly derailing proposed merger
Connecticut regulators today said they will launch a review of the proposed merger between Boston’s NStar and Hartford-based Northeast Utilities, a move that reverses an earlier ruling and could jeopardize the plan to create a $17.5 billion combined company.
In a draft decision, expected to be finalized in two weeks, the Connecticut Public Utilities Regulatory Authority said it would assert authority over the merger in part because of concerns that Massachusetts officials could impose conditions on the partnership, such as buying power from Cape Wind, that would affect Connecticut customers.
Not long after the merger was announced in the fall of 2010, the authority decided it did not have jurisdiction because the merger wouldn’t create a new holding company in Connecticut after NStar was absorbed by Northeast Utilities. But Cape Wind and other “new issues raised’’ by the state’s Office of Consumer Counsel led regulators to conclude that the previous ruling “was in error and should be rescinded, reversed or altered,’’ according to the draft decision.
It is unclear whether the Connecticut Public Utilities Regulatory Authority agency would be able to conclude the case April, when the utility companies are required by the merger agreement to reassess the deal if regulatory approvals aren’t in place.
Al Lara, a spokesman for Northeast Utilities, said if Connecticut regulators assert their jurisdiction over the merger, the companies would have to file an application for review, which they hope would be expedited to meet the April deadline.
“Going beyond that would require a re-examination of the merger,’’ Lara said, and “whether the companies want to proceed with it.’’
In a statement, Connecticut regulators said they will work to complete the review in a timely fashion. NStar referred requests for comment to Northeast Utilities.
In Massachusetts, the proposed partnership has been under scrutiny for more than a year, and faces another hurdle on Friday, when regulators will consider whether to postpone action on the merger until NStar completes a lengthy review of its rates. Massachusetts regulators have also adopted a standard of review that would require the combined company to meet aggressive state goals for using wind, solar, and other renewable — and expensive — power sources.
If approved, the merger it would create one of the nation’s largest utilities, serving nearly 3.5 million electric and gas customers from Westport, Conn., on the New York border, to the Northern New Hampshire town of Pittsburg on the Canadian border.
NStar and Northeast Utilities executives first proposed the partnership in October 2010, saying the deal would create a $17.5 billion energy company better able to bargain for cheaper supplies of electricity and natural gas, and to invest in renewable power sources.
Connecticut regulators began reconsidering their initial decision to step aside mid pressure from state officials, especially after questions were raised about how Connecticut Light & Power, a subsidiary of Northeast Utilities, responded to an unusual October snowstorm that left tens of thousands without power for days.
Connecticut attorney general George Jepsen said Connecticut Light & Power’s “failure to deal adequately’’ with the storm only reaffirmed his belief that utility regulators and state officials “have an obligation to protect Connecticut consumers’’ by reviewing the merger.
“This is an enormous step and I think we’re better going into it with our eyes wide open,’’ Jepsen said earlier this week.
In yesterday’s decision, Connecticut regulators indicated that they would reconsider their jurisdiction over the merger because — as the state’s consumer counsel pointed out — the new company would be led by NStar chief executive Tom May, and NStar officers would also have half the seats on the board. In addition, they cited state consumer advocates concerns that Massachusetts regulators could impose conditions related to the use of renewable energy, such as wind and solar power, that could affect impact Connecticut ratepayers and Connecticut’s environmental goals.
In Massachusetts, merger proceedings have already been delayed several times — often at the request of state energy resources officials, who question how NStar’s partnership with Northeast Utilities would affect the environment and customers.
To comment, please create a screen name in your profile
To comment, please verify your email address
Conversation
This discussion has ended. Please join elsewhere on Boston.com