Rhode Island and Massachusetts utility regulators last week approved plans to adjust electric rates in both states in connection with the merger of New England Electric System and Eastern Utilities Associates. The approvals come more than a year after the merger was announced in February 1999.
The $640-million pairing of the Massachusetts-based utility holding companies must still get a green light from the Securities and Exchange Commission in Washington, D.C. Depending on how long it takes to get the go-ahead from the SEC, the companies could be combined officially as soon as April 1, according to a New England Electric spokeswoman.
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In Rhode Island, the merger would combine the state’s three major electric utilities. Blackstone Valley Electric Co. and Newport Electric Corp., now owned by Eastern Utilities, would be folded into Narragansett Electric Co., owned by New England Electric.
Narragansett Electric’s original plan to adjust the three separate sets of electric rates in connection with the merger ran into fierce opposition from state officials and heavy energy users last year.
The company reached a settlement with opponents of the original rate plan early last month, and the Rhode Island Public Utilities Commission approved the compromise plan on March 14.
The settlement agreement provides for lower electric rates for many customers and a five-year freeze on rates. The company gets the right to pocket a portion of any savings it achieves by combining the three utilities.
Commissioner Kate Racine said the PUC approved the final blueprint for electric rates after amending it to, among other things, allow regulators to revisit rates at any time.
“The commission retained all rights to be able to examine the rate plan at any time in the future should the commission feel that it wasn’t protecting the public with proper and reasonable rates,” Racine said.
The Massachusetts Department of Telecommunications and Energy approved a similar rate plan for the merging company’s Bay State utilities on March 15.
A second proposed merger, which also is awaiting SEC approval, would roll the soon-to-be-enlarged New England Electric into energy giant National Grid Group PLC of Coventry, England.
The National Grid-New England Electric pairing was announced in late 1998, but it has faced a slow road to approval. The SEC piled on another delay in January, when the agency sought public input on the implications of foreign corporations acquiring U.S. utilities.
The deadline for filing comments with the agency was early last month, but the SEC hasn’t said yet what changes, if any, it plans to make in weighing foreign acquisitions. The agency requested the public’s input on the possible effects of such acquisitions on regulators, investors and consumers.
Some consumer advocates fear that foreign utility holding companies operating in the United States could be beyond the reach of state regulators, but National Grid has assured federal energy regulators that it would cooperate fully with state public utility commissions here.
National Grid applied for SEC approval of the landmark $3.2-billion merger last March.
The amount the British company agreed to pay for New England Electric has been increasing by more than $190,000 a day since Nov. 5, and the meter is still running. The merger agreement stipulates that the price National Grid must pay to acquire New England Electric’s stock increases by three-tenths of a cent per share for each day the merger isn’t completed after the November deadline.
As of Monday, delays had boosted the acquisition price by roughly $26 million, an increase of less than 1 percent. The price National Grid agreed to pay for New England Electric’s stock is capped at $54.35 per share, which represents more than $35 million more than the price the company would have paid if the merger was completed before Nov. 5.
Similar penalties have inflated the cost of the New England Electric-Eastern Utilities merger by roughly $7.5 million through Monday.
