City-owned utility Enmax’s proposed US$1.3-billion purchase of a Maine-based electricity company has been approved by a U.S. regulator.
The Maine Public Utilities Commission gave the green light to Enmax’s purchase of Bangor-headquartered Emera Maine on Tuesday, after a negotiated settlement was reached between the two companies, the Maine Office of Public Advocate and other interested parties. The deal is expected to close within the next week.
Tuesday’s approval was the final hurdle Enmax had to clear for what has been a controversial proposal. The Calgary company has said the acquisition will help Enmax generate stronger returns and potentially increase the annual dividend it pays to the city.
However, critics in Canada and the U.S. have questioned whether Enmax’s balance sheet is strong enough to support the purchase. The Emera Maine acquisition will be entirely debt-financed, and will see Enmax take on roughly $455 million in debt. In October, credit rating agency Standard & Poor’s downgraded Enmax by one level over concerns about debt related to the transaction.
Citing concerns about Enmax’s finances and service quality risks to ratepayers, the Maine Public Utilities Commission initially rejected the proposed acquisition in a decision earlier this month. The negotiated settlement that won approval Tuesday will see Enmax make a number of changes to prove a “net benefit” to Maine customers, including holding customer distribution rates at current levels until October 2021, implementing customer service quality and reliability performance requirements, customer rate credits, and increasing levels of community investment.
“ENMAX has made a significant, long term commitment to Emera Maine’s customers, employees and Maine communities,” Enmax president and CEO Gianna Manes said in a news release. “With this approval, we are looking forward to a smooth transition of ownership.”
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