Utilities apt to shed 350 jobs in merger

By Erin Ailworth
Globe Staff / April 8, 2011

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Merging NStar and Northeast Utilities would allow the new company to cut nearly 350 administrative jobs over five years, mostly through attrition, according to an analysis the utilities are expected file today with Massachusetts regulators.

Those job reductions, plus other operational efficiencies, would help the merged utility save an estimated $784 million in its first decade, some of which would be passed on to customers in the form of lower bills, according to a copy of the document that was provided to the Globe.

The filing is being made in response to a stricter standard adopted by the state Department of Public Utilities that requires utility mergers to create a “net benefit’’ for consumers, rather than just result in “no net harm.’’

It includes testimony from NStar, of Boston, and Connecticut-based Northeast Utilities executives that details how the utilities plan to advance state goals to reduce greenhouse gas emissions, other pollution, and to make more use of cleaner energy sources, such as solar power.

After the merger, “we will dramatically reduce our carbon footprint, we’ll be smart in the fleets we run, our crews, how we operate our facilities,’’ said NStar’s chief executive, Thomas J. May.

The state’s new standard is aimed, at least in part, at pressuring utilities to increase their use of renewable energy sources.

Regulators began considering the stricter standard at the request of the state Department of Energy Resources. State energy officials said addressing the clean-energy goals in any merger is important, given rising oil prices, concern about climate change, and the effect of both on the economy and consumers.

“The ‘no net harm’ standard was not adequate for what we face in terms of the energy issues today, and for the expectations that have been set across Massachusetts by the administration,’’ said Mark Sylvia, commissioner of the Department of Energy Resources.

Environmental advocates praise the stricter requirements.

“It’s an important acknowledgement by the Department of Public Utilities that we need public benefits to approve a merger like this,’’ said Jeremy McDiarmid, Massachusetts director of Environment Northeast, an advocacy group.

“The new standard,’’ he said, “gives the companies an opportunity to demonstrate real leadership in achieving the Commonwealth’s clean energy and environmental goals.’’

May said he sees the merger as a “tremendous opportunity’’ to strengthen the company’s ability to serve customers and to expand renewable projects. They could include building on Northeast Utilities’ use of electric vehicles or ramping up NStar’s exisiting energy-efficiency programs.

“We will make a very strong case about the environmental benefits of this merger,’’ he said.

NStar and Northeast Utilities proposed a partnership in October, saying it would create a $17.5 billion company better able to bargain for cheaper energy supplies and pursue clean-energy projects.

At the time, the utilities said they did not expect the merger to result in layoffs — a position that NStar spokeswoman Caroline Allen reiterated yesterday, when she said any lost jobs are expected to occur through attrition.

“Over time there will be some changes,’’ she said. “There are no broad-based, corporate-wide layoffs [planned].’’

Charlie Harak, a lawyer who represents NStar workers through the Utility Workers Union of America, Local 369, and is a consumer advocate through the National Consumer Law Center, questioned whether the merger will benefit customers and employees.

He cited a review released yesterday of the accounting practices used by National Grid, an NStar competitor.

The review showed that cost-reporting issues uncovered recently at National Grid — such as passing the bills for executive perks not related to utility operations to ratepayers — were at least partially due to a papering together of various accounting programs following a merger.

“Merging companies often have unintended dysfunctions,’’ Harak said.

Erin Ailworth can be reached at