PURA: PURA Issues Draft Ruling Calling for Review of NU/NStar Merger

January 4, 2012
 
PURA Issues Draft Ruling Calling for Review of NU/NStar Merger
Final Decision of Regulators Scheduled for Jan. 18
 
The Connecticut Public Utilities Regulatory Authority (PURA) today issued a draft decision in which it concludes that it has the regulatory jurisdiction to review and approve the proposed merger between Northeast Utilities and NStar.
 
The draft decision reverses a previous PURA ruling which was under appeal by Connecticut’s Office of Consumer Counsel (OCC).  In its draft decision, PURA cited new information provided by Connecticut’s Attorney General and the OCC as the reason for its decision to review the proposed utility company merger.   This information was submitted as part of a proceeding (Docket Number 11-12-07) initiated by the NRG Companies that asked PURA to reconsider its previous ruling. 
 
Parties to this matter may submit written “exceptions” to PURA’s draft decision by January 9 and then make oral arguments before the three PURA directors on January 12.   PURA is scheduled to consider and vote on a final decision January 18.  If the draft decision is upheld in its final action, PURA would require Northeast Utilities to make an application seeking approval of Connecticut’s regulators for the merger as well as its terms and conditions.  
 
In its draft decision, PURA said, “The Authority is mindful of certain milestones relating to the completion of the proposed merger and will dedicate all necessary staff resources to achieve a complete and thorough regulatory review consistent with that time schedule.”  Upon receipt of an application concerning the merger, PURA will establish a docket and procedural schedule to expeditiously perform that review.
 
The PURA draft decision states that, it is “legally obliged to review the proposed merger to ensure that after any resulting merger CL&P and Yankee will have the qualifications and ability to provide safe, adequate, reliable and reasonably-priced services for Connecticut customers.” 
 
In the draft decision, PURA states, “The OCC, therefore, presents sufficient new information that the terms and conditions that NU may be required to agree to or that may be imposed part of the regulatory approval of the proposed merger by the Massachusetts Department of Public Utilities raises issues with respect to whether or not any of these terms and conditions may constitute attempts to directly or indirectly interfere with or exercise or attempt to exercise authority or control over CL&P or Yankee Gas with respect to several subject matter areas that fall under the regulatory authority of the Department of Energy and Environmental Protection (DEEP) and the Authority.  These subjects include, but are not limited to, levels of service, emergency storm response, renewable energy, energy efficiency, transmission and distribution system best practices, etc.”
 
The draft decision went on to state that, “This determination alone triggers the Authority’s jurisdiction and duty to review the proposed merger.  Any terms and conditions relating to these and other issues potentially affecting Connecticut public service companies, CL&P and Yankee Gas, will be examined and assessed in a merger review proceeding after NU and NSTAR file an application for review of the proposed merger with the Authority.”
 
The draft decision also notes that an analysis presented by Attorney General George Jepsen of the significance of possible management changes that would occur under a merger of NU and NStar also point to PURA’s jurisdiction on this matter. 
 
The actions taken by PURA today technically included:
  • Reopening Docket 10-12-05, the original June 1, 2011 decision regarding the merger and redesignating it as Docket 1-12-05RE01
  • Issuing a draft decision in Docket 10-12-05RE01 that concludes it has regulatory jurisdiction to review and rule on the proposed merger between Northeast Utilities and NStar.
  • Closing Docket 11-12-07, which addresses the petition submitted by NRG, because issues it raised will be addressed in Docket 10-12-05RE01.
Background
 
OCC had originally asked the then-Department of Public Utilities Control (DPUC) to exert regulatory authority over the proposed NU/NStar merger on Dec. 3, 2010.  Based on information available to it at the time, DPUC determined on June 1, 2011 (Docket 10-12-05)  that it lacked authority to do so.  OCC filed an appeal, which is still pending in state Superior Court, New Britain.
 
NRG was seeking to remain part of the appeal, but the court ruled November 18, 2011 that the company may have lacked standing to do so because it had not “exhausted its administrative remedies” by itself asking PURA for a ruling concerning its authority over the merger.  As a result, on December 9. 2011, NRG petitioned PURA requesting it to issue a declaratory ruling that it must review the merger.

Draft Decision - Docket No. 10-12-05RE01
 
Draft Decision - Docket No. 11-12-07
 
Draft Decision - Docket No 10-12-05