BOSTON – Massachusetts officials dropped a demand that Nstar face a prolonged rate-increase review as part of the state’s analysis of its $4.8 billion takeover by Northeast Utilities, Bloomberg News reported.
The announcement at a Mass. Department of Public Utilities hearing in Boston this month removes an issue that could have tied up merger approval in the state, raising risks that the deal wouldn’t close by the April 16 termination date set by the companies.
The companies must gain approval from officials in Massachusetts and Connecticut before closing the deal announced Oct. 18, 2010, which would create New England’s largest utility and provide electricity and gas to more than 3.5 million customers in three states.
The merging companies face demands for large concessions in Massachusetts and could find it tough to recover more than $200 million in storm-related costs from Connecticut consumers, said Andrew Weisel, a utilities analyst with Macquarie Capital USA Inc., in a Jan. 4 research report.
Massachusetts energy officials withdrew their demand for a rate review and instead endorsed Attorney General Martha Coakley’s recommendation that the merging companies either freeze rates for five years or refund $314 million to customers, said Lisa Capone, a spokeswoman for the Mass. Office of Energy and Environmental Affairs.
The two companies planned to study their options and respond to Massachusetts regulators by Jan. 13, said Nstar’s Allen.
Connecticut regulators said in a Jan. 4 filing that they would reverse an earlier decision and review the merger because of a Northeast subsidiary’s struggles to restore power following Hurricane Irene and last fall’s snowstorm. •