Consumer protections puts Fortis’ U.S. deal to bed

Staff ~ The Telegram
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A merger between New York-based CH Energy Group and Fortis was on the fast track — announced in February 2012 and approved by CH Energy Group shareholders in June 2012 — before it hit a snag with U.S. regulators.

This week, the companies issued a statement to announce the deal is moving ahead, under an agreement providing specific protections for ratepayers of Central Hudson Gas and Electric, a utility subsidiary of CH Energy.

CH Energy has about 300,000 electric and 75,000 gas energy customers in New York state.

The announcement sent the price of Fortis shares up in response Monday.

“The settlement agreement will moderate future customer rate increases by providing $35 million to cover expenses that normally would be recovered in customer rates, for example significant restoration expenses related to superstorm Sandy,” according to a statement issued by both companies.

“Also under the terms of the (agreement), Central Hudson customers will save a guaranteed $9.25 million over five years resulting from the elimination of costs the utility now incurs as a public company.

“Additionally, the settlement agreement requires that customer delivery rates be frozen until July 1, 2014 and requires the establishment of a $5-million Customer Benefit Fund for economic development and low income assistance programs for communities and residents of the Mid-Hudson Valley.”

As part of the settlement, Central Hudson will maintain its current employees, name and headquarters in Poughkeepsie, New York.

The deal was originally estimated at $1.5 billion and is now expected to close in the second quarter of 2013, subject to approval from the New York State Public Service Commission.

“Fortis worked closely with management of Central Hudson through this thorough regulatory approval process and has gained increased knowledge about the utility’s operating philosophy and the regulatory oversight requirements in New York State,” Stan Marshall, Fortis president and CEO, has stated.

Organizations: CH Energy Group, Central Hudson Gas and Electric, New York State Public Service Commission

Geographic location: U.S., New York State, Mid-Hudson Valley

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Recent comments

  • Cold Future
    January 30, 2013 - 11:43

    With all the squabble with the NF Power rate increase of 7.2 % wait til it sinks in about the 50% increase for Muskrat on top of it all. The 7.2 % is about $100 for the householder who is all electric and uses $ 3000 per year compared to the $1500 per year increase with Muskrat. It will need more than a HST rebate to reduce the smarting from that sucker. Present polititians will certainly be more than glad to be out of office when that reality comes around.

  • John Smith
    January 30, 2013 - 09:37

    Well's not that simple. First of all...any and all rate increases in NL go through the PUB...the PUB has 100%, total control over what we pay for our power. Then you have all the differences...we live on an island, our entire province has around 300,000 customers, we have a landmass the size of the state of california, so, there is no comparison. as well, the provincial government provides a support program for those with low incomes to pay for electricity.

    • Corporate Psycho
      January 30, 2013 - 19:09

      God Guard Thee Nl, If you think the PUB now controls what we will pay for electricity in the future you are deluded.

    • John
      January 31, 2013 - 07:52

      As a mainlander, the excuse of "it came here by boat", or "our province is massive" has gotten very old. Someone once told me "Newfoundlanders will help their fellow man, but they'll rob their neighbour in order to do it."

  • Jack
    January 30, 2013 - 06:54

    Since Central Hudson Energy customers will benefit from lower electricity bills but Newfoundland Power counterparts are being slapped with huge rate increases, seems to me that Fortis are showing biased against their home base customers, Newfoundlanders. Power company takeovers from Canadian counterparts like Fortis is ok as long as Canadians get equal benefits such as low income assistance programs. In other words, if Central Hudson Energy customers have these assistance programs, so should Newfoundland Power, a Fortis Company, customers. Its only fair.