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Under the Microscope
DPUC puts brakes on ConEd/NU merger; further review needed
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Business New Haven
9/4/2000
By: Linda G. Mele
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Consolidated Edison's $7.5 billion offer to take over Northeast Utilities hit a snag last month when the state's Department of Public Utilities Control (DPUC) announced that its commissioners would need more time to review particulars of the proposal.
On August 22 the DPUC said while most cases require the appointment of only three of the five commissioners, because this case is so complex all five were assigned to it and a “majority vote will constitute the final determination.”
DPUC spokesperson Beryl Lyons said the hearings and legal briefs filed in this case created “a mountain of evidence.”
“The department originally expected to release a preliminary decision on August 23,” Lyons said, “but will delay the date until Tuesday, September 12 to allow the [DPUC] to give the matter complete and thorough attention.”
NU serves 1.7 million customers in 149 communities. It is the parent company of Connecticut Light & Power Co. and Yankee Gas Services Co.
According to Lead Commissioner Glenn Arthur, the commissioners are weighing all the options.
“At times the department's deliberative process is dealing with a large body of evidence on such complex issues that the evidence could lead to more than one conclusion,” said Arthur. “All possibilities are being considered.”
Perhaps neither NU nor ConEd considered that, in addition to state regulators and regulations they would also be butting heads with the state's aggressive attorney general, Richard Blumenthal.
“I am strongly opposed to the merger because the present deal will be damaging to Connecticut consumers and our economy,” Blumenthal said. “It offers no benefits to our state.”
“Essentially, it would eliminate jobs in Connecticut, threaten the quality of service, provide absolutely no rate reductions for the foreseeable future and threaten our open space initiatives,” Blumenthal added.
NU currently owns almost 7,900 acres of open space in 90 Connecticut municipalities. And although the company has a standing agreement with the state's Department of Environmental Protection regarding the preservation of those lands, nothing in the agreement ensures that, according to Blumenthal.
According to testimony in the case, the merger would save customers $1.3 billion over a period of ten years.
If approved, the deal would create the largest gas and electric utility company in the country, serving more than six million customers from the Canadian border to Pennsylvania.
NU spokesman Terrence McIntosh said that of the eight states and numerous federal regulatory agencies that must approve the deal, only Connecticut, New York and New Hampshire are still reviewing the proposal.
McIntosh said most of the states have detailed procedures that must be followed like those in Connecticut.
“Massachusetts does not have a regulatory procedure so we only had to file an application there,” McIntosh said.
“We're cautiously optimistic,” said NU spokesman Frank Poirot. “We're confident that in one form or another [it] will go forward.”
The DPUC's Lyons said that regulations require the commissioners to consider “the acquiring company's financial resources, technical competency and managerial suitability.”
“The reason that the DPUC must consider those elements is because state law also requires public utilities in Connecticut to provide safe, adequate and reliable service,” Lyons said.
According to Lyons, the DPUC has broad powers when dealing with issues of “public interest.”
“The individual public-benefit issues will vary from case to case, the utility type and the size and holdings of the company,” Lyons explained.
The commissioners may also consider rates, corporate citizenship, employment levels, the impact on the state's economy, improvements to the local company's plant or operations, service reliability, customer service, environmental impact, use of open space land and “any other issue of concern to ratepayers and citizens of Connecticut,” Lyons said.
“This [delay] is not unusual,” Lyons said, “especially in larger, more complex cases.”
Lyons said the commissioners can approve the petition, deny it or approve it with conditions.
Blumenthal said he hopes the regulators “look at the ongoing, severe problems ConEd has in New York to see what this merger would mean to Connecticut.”
Lyons says a draft of the decision will be available on September 12 on its Web site (www.state.ct.us/dpuc) in the “What's Hot!” area.
Written exceptions to the draft must be submitted on September 20 and, if necessary, oral arguments will be heard on September 29.
A final decision is anticipated on October 4, Lyons said.
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