As it moves ahead with its merger with NStar, Northeast Utilities reported improved results as it filed formal notice with federal regulators for a new transmission line to funnel hydropower to southern New England from Quebec.
In the third quarter, Northeast Utilities earnings totaled $100.5 million even as revenue dropped 5 percent to $1.2 billion.
Subsidiary Connecticut Light and Power Co., which provides power in many parts of Fairfield County, tripled its profits from a year ago due in part to hot weather driving up electricity use, improvements in collections and the impact of a rate increase that went into effect in July.
In mid-October, Northeast Utilities unveiled a $4.2 billion acquisition of Massachusetts-based NStar, with the companies to maintain dual headquarters in Hartford and Boston. While company executives have said they do not believe they require the approval of the Connecticut Department of Public Utility under existing law, DPUC has nevertheless vowed to track the deal.
In a letter to Attorney General Richard Blumenthal, DPUC agreed it does not appear that Northeast Utilities must secure any specific approvals from the agency, but cited Connecticut General Statute 16-47 in noting that DPUC can void any “change of control actions” undertaken without its approval. Northeast Utilities shareholders will have a majority stake in NStar, which will formally become a subsidiary of Northeast Utilities.
“I have always been interested in an industry that consolidates,” said Tom May, CEO of NStar who will lead the combined Northeast Utilities, speaking this month at the Edison Electric Institute Financial Conference in Palm Desert, Calif. “Unfortunately, regulators don”™t always agree with us the way you should do it, but this is the perfect deal at the right time for both companies.”
Together, Northeast Utilities and NStar executed a transmission service agreement with Hydro Quebec to construct a transmission line that will bring 1,200 megawatts of power to New England, providing “clean” energy to about one million homes. In mid-October, the companies filed a formal application with the U.S. Department of Energy for the project, and at last report expected to file the project with the Federal Energy Regulatory Commission as well in November.
The combined company will have 3.5 million customers and a total value of about $17.5 billion.
“I have not met anyone that hasn”™t said ”“ logically ”“ this makes sense,” said Chuck Shivery, CEO of Northeast Utilities, who will become chairman of the combined company. “As we have had storms, we have sent crews to NStar. NStar has sent crews to our service territories. So we have worked together. We know how that works, and the Hydro Quebec project is just one more ”¦ example of the two companies working together, and I think as that proven track record shows, this then becomes the next logical step in that process.”
Shivery added that “there will be a change in the composition of some ”¦ employees,” in his words, but that any reductions would mostly be through retirement or voluntary attrition.
