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Connecticut looks to block public utility merger

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July 5, 2011

Connecticut

By David Godow

HARTFORD, Connecticut:

Connecticut State Consumer Counsel Mary Healey filed suit in state court on Monday to force the state's Department of Public Utility Control to review the purchase of Boston-based energy utility NStar by rival Northeast Utilities. Healey, joined by Connecticut Attorney General George Jepsen, argued that the $17.5 billion utility conglomerate that would emerge from the buy would hold too much market power, potentially hurting consumers.[1][2]

Healey's appeal comes on the heels of DPUC's June 1 refusal to look over the deal on the grounds that no clear shift in ownership would take place. NStar and Northeast Utilities would continue as separate companies, with the former as a wholly-owned subsidiary of the latter. According to state law, oversight by the DPUC applies only when a utility plans to "directly or indirectly (1) merge, consolidate, or make common stock with any other company, or otherwise dispose of any essential part of its franchise, plant, equipment or other property..."[3] According to DPUC's interpretation of that law, no "consolidation" will occur, as NStar will continue to be entirely independent of the rest of Northeast Utilities.

Healey counters that integrating NStar into Northeast Utilities' corporate structure would make the latter a new company with different directors and management, thus qualifying it as a "merger." She argued that the transaction "is of such an enormous magnitude that it should not escape rigorous review by the DPUC."[4] The deal previously received approval from the Federal Energy Regulatory Commission and shareholders of both companies, while the utilities insist that it will save consumers as much as $780 million over the next 10 years.

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