OP-ED | NU-NSTAR: Give Us A Piece Of The Action
Longtime observers of government tend to be a cynical lot. Most of us think politicians act in their own self interest above all else. We think the system too often serves only the well connected.
Sometimes, however, the system actually works for rank-and-file-consumers — or at least it shows some promise of doing so. To wit, the planned amalgamation of two giant energy utilities, one of which serves the state of Connecticut.
The proposed merger of Northeast Utilities and Boston-based NSTAR has passed muster with Massachusetts but still faces a regulatory battle in Connecticut. Last month, Bay State regulators gave a stamp of approval to the multi-billion-dollar merger, but only after extracting major financial concessions from the companies.
In return for the go-ahead, the utilities promised to freeze distribution rates for four years, pay rebates totaling $21 million to 1.6 million Massachusetts ratepayers, avoid significant layoffs and buy at least a quarter of the expensive power generated by the massive Cape Wind project. Analysts have said the off-shore wind turbine venture would not have been financially viable without the agreement from NU-NSTAR to buy such a large chunk of the power.
For the deal to be consummated by its April 16 deadline, the companies must receive approval from Connecticut regulators. Ironically, the Public Utilities Regulatory Authority (PURA) decided last year that it didn’t even have the standing to review the proposed merger.
But earlier this year, after prolonged power outages caused by tropical storm Irene and a freak October snowstorm, regulators reversed course in the face of pressure from Attorney General George Jepsen and irate consumers. And last week, in yet another national media appearance, Gov. Dannel P. Malloy told Reuters there’s a movement afoot in the General Assembly to deny legislative approval of the merger if the utilities don’t meet certain conditions.
Not surprisingly, the provisions of the bill on the approval of utility mergers are quite stringent: There will be no rate increases for five years after a merger, no negative impact on employment in the state for five years, no diminished customer service, and no negative impact on the utility’s ability to provide reliable service and restoration of service after a disruption.
And, while conceding it would be inappropriate to comment on the ongoing negotiations, Malloy showed his hand anyway and flatly told the news agency that Connecticut might put the kibosh on the proposed merger if the state isn’t rewarded in the same way as our neighbor to the north.
“We know what Massachusetts has gotten from it and we will get something equivalent or this deal could be in danger,” he told Reuters.
Let me get this straight: a poor response to a power outage was the catalyst that caused the state to declare itself an interested party to a proposed merger that will likely cause the new utility giant to open its wallet to us? Not bad for a day’s work.
So unless Malloy and the General Assembly are bluffing, the central question now will be: what will ratepayers and the state government get if Connecticut approves this merger? Well, you’d have to assume the layoff- and rate provisions — or something close to them — are doable. And since Connecticut ratepayers will make up 56 percent of the merged company, wouldn’t we deserve even more in rebates than the $21 million Massachusetts got?
But alas, we don’t have a large wind-power venture—or any significant renewable energy project on the table that I’m aware of. There has been speculation that the new utility might be compelled to buy electricity from the proposed Montville Station Biomass Conversion, which has stalled because investors couldn’t find buyers for its pricey electricity. But Malloy isn’t saying.
I’m not usually a fan of soaking corporations. But in the case of a regulated monopoly that soaks Connecticut ratepayers with some of the most expensive electricity in the nation, I say take what you can get. Some might call that extortion. I’d call it good business practice — and good government.