RadioBDC Logo
Feel It Still | Portugal. The Man Listen Live

AG seeks freeze on NStar’s rates

Customers should get benefit from planned merger, Coakley says

By Erin Ailworth
Globe Staff / September 29, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

Attorney General Martha Coakley is calling on state utility regulators to impose a five-year rate freeze, or to credit electricity and natural gas customers with more than $300 million in expected savings, as a condition of approving the proposed merger of Boston’s NStar and Connecticut-based Northeast Utilities.

In a filing with the state Department of Public Utilities yesterday, Coakley said she would support the merger if these and other conditions are met. In a separate filing, state energy officials said approval of the merger should also hinge on the company signing a 15-year contract to buy nearly 130 megawatts of wind-generated energy, about 2 percent of total electricity delivered by NStar.

The utilities said they intended to merge nearly a year ago, and state regulators have been reviewing the proposal for nearly as long. The state Department of Energy Resources and Coakley have also been scrutinizing the deal.

“The merger of these two public companies has the potential to lower costs for customers through increased operating efficiency, but ratepayers need to see the results of those savings on their bills,’’ Coakley, the state’s ratepayer advocate, said in a statement. “These merger conditions are necessary to ensure that the companies’ shareholders don’t simply pocket the increased profits.’’

Coakley also called for safeguards to protect ratepayers against any higher debt costs incurred as a result of the merger.

NStar spokeswoman Caroline Allen said the company will respond to these proposals when it makes its own filing to the public utilities department in two weeks.

“There were 11 briefs filed with the DPU in our merger proceeding today,’’ Allen said, “and we will be reviewing all of them and filing our reply brief on Oct. 12th.’’

NStar’s combination with Northeast Utilities would create a $17.5 billion energy company with nearly 3.5 million electric and gas customers from Westport, Conn., on the New York border, to Provincetown, to the northern New Hampshire town of Pittsburg on the Canadian border.

Regulators have been reviewing the proposed partnership since November, using a new standard - one that requires mergers to provide a “net benefit’’ to the public. The stricter standard came at the request of the Department of Energy Resources, and will likely put more pressure on the companies to increase their use of nonpolluting power sources like wind turbines and solar panels.

The administration of Governor Deval Patrick has had private discussions with NStar about buying power from Cape Wind, to be built in Nantucket Sound. Energy resources commissioner Mark Sylvia said that his agency’s filing that regulators require the utilities to buy large amounts of wind power were not aimed directly at the offshore wind project.

“Their purchase of some of Cape Wind’s output would help with that goal,’’ Sylvia said. “But that is one option.’’

In its filing yesterday, the energy resources agency also renewed an earlier bid to halt the merger proceedings over concerns about how the deal might affect the environment and utility bills. The agency has asked regulators to stay their decision until next year, when NStar is scheduled to undergo a lengthy rate review, unless the utility companies provide additional information on the impacts of their merger.

Regulators are scheduled to hear oral arguments on the agency’s original motion for a stay in November.

NStar, meanwhile, has previously said that such a long delay in the review could kill the deal. If the companies don’t have all the necessary approvals by April, they will reassess the partnership.

In addition to a decision from Massachusetts regulators, NStar and Northeast Utilities must still gain approval for the merger from the federal Nuclear Regulatory Commission.

Erin Ailworth can be reached at Follow her on Twitter @ailworth.