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Jepsen Urges Regulators to Review Utility Merger

by Hugh McQuaid | Dec 26, 2011 12:02pm
(1) Comment | Commenting has expired
Posted to: Business, Energy

CTNJ File Photo

Attorney General George Jepsen

State utility regulators declined in January to review a proposed merger between Northeast Utilities and Massachusetts-based NSTAR. However, Attorney General George Jepsen asked Friday that they reconsider in light of NU’s power restoration performance this year.

Under the merger, NSTAR shareholders would acquire 44 percent of NU, the parent company of Connecticut Light and Power, and be allowed to appoint seven of its 14 board members. 

When it first considered the issue, the then Department of Public Utility Control did not recognize its statutory authority to approve the merger. Even after the merger, NU will remain the corporate parent of both CL&P and Yankee Gas Service Company, it said in its draft decision.

As a result, both companies will remain “subject to the continuing jurisdiction of the department without any reduction of the department’s existing regulatory oversight or any diminishment in the department’s authority over these public service companies,” the DPUC found.

However, Jepsen filed comments with the regulatory agency, now called the Public Utilities Regulatory Authority, asking them to issue a declaratory ruling that the merger requires their review and approval.

Jepsen cited the results of the independent review conducted by Witt Associates which examined NU’s response to the widespread power outages after Tropical Storm Irene and the October snowstorm. The report raised “significant additional issues about the utility’s management and its executive leadership,” he said.

“The Witt report found serious deficiencies in NU’s and CL&P’s management preparation for and response to these major storm-related outages. The proposed merger promises to further disrupt NU and CL&P management’s ability to prepare for and respond to the next storm,” Jepsen said in a prepared statement.

Jepsen’s comments echo those in the petition of the NRG Companies, a group of utility companies contesting the merger. In the Witt report the companies found a connection between the management level activities of NU and customer service.

“The report noted that an early key element in any outage restoration effort is the seeking of mutual aid from sister utilities within the NU system,” the petition said.

The NRG Companies argue that if the merger is successful, NSTAR will be exercising control over CL&P, which is exactly the type conduct Connecticut statutes require PURA to review and approve.

Department of Energy and Environmental Protection spokesman Dennis Schain said PURA has accepted NRG’s petition and will be reviewing its previous decision. The regulators will explore the merits of the companies’ arguments that the merger should require their approval. PURA expects to make a draft decision by Jan. 4 and a final decision by Jan. 18, he said.

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posted by: Careful | December 26, 2011  6:14pm

If this merger further disrupts response to the next major storm—then it should not be considered, but shelved.