One last hurdle to close deal with CH Energy Group: company
Fortis Inc., parent to Newfoundland Power, has been trying to seal a deal on its acquisition of U.S.-based CH Energy Group for the past 15 months.
Now side by side with CH Energy management, the utility is facing one last, key regulatory hurdle. It needs the approval of the New York State Public Service Commission.
As The Telegram has reported, CH Energy Group is parent to Central Hudson Gas and Electric Corporation, a power company with about 375,000 customers in upper New York state.
Fortis announced in February 2012 it was to buy CH Energy for about US$1.5 billion, including about US$500 million in debt.
A joint proposal regarding the merger was filed with the New York State Public Service Commission on January 28.
On May 3, a decision of the commission did not come down in favour of the deal, as two judges recommended against the merger as it stood.
In response, Fortis and CH Energy have today filed a letter promising additional incentives for ratepayers, in an attempt to get the commission’s approval.
The new incentives include a rate freeze of an additional year — meaning a freeze on rates from July 1, 2012 to July 1, 2015 for Central Hudson customers.
The joint proposal also extends from five to 10 years a commitment to maintain current financial commitments by Central Hudson to community programs, events and organizations. In addition, $5 million has been set aside for economic development and low-income programs, to be issued with oversight by the public service commission.
“We appreciate the strong support that we have received from so many of our stakeholders, and today we proved that we have also listened to requests for additional enhancements to the joint proposal,” said CH Energy Group chairman Steven Lant, in a written statement issued jointly by the companies.
“We know this merger is in the best interests of all we serve, and we are committed to delivering its many benefits to our customers,” he said.
“The unique Fortis federation model ensures Central Hudson will remain a locally run company with customers receiving the benefits offered by this transaction,” said Fortis chief financial officer Barry Perry.
“We look forward to receiving the commission’s approval in order to begin providing those benefits to Central Hudson customers.”
The incentives added today follow on the heels of a public statement by the IBEW Local 320 union, supporting the merger, after it was announced the companies were committing to a minimum four years with no layoffs.
Fortis and CH Energy are requesting the merger be approved at the next meeting of the public service commission, on June 13.
At the Fortis AGM in St. John’s on May 9, president and CEO Stan Marshall said he hoped the merger deal might be closed by June 30.