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.