AG Coakley Urges Department of Public Utilities to Impose Conditions on Merger of NSTAR and Northeast Utilities
Coakley Proposes Five-Year Rate Freeze, Other Ratepayer Protections
BOSTON -- Attorney General Martha Coakley has recommended that the approval of the proposed merger between NSTAR and Northeast Utilities be subject to certain conditions to ensure that electric and gas customers receive the benefits of the merger.
In a brief file size 3MB filed with the Department of Public Utilities (DPU) today, the AG’s Office argued that as a condition of the merger, the DPU should either impose a five-year distribution rate freeze for NSTAR Electric, NSTAR Gas, and Western Massachusetts Electric Company (WMECo), or require the companies to flow $314 million in estimated savings back to customers in the form of a credit.
“The merger of these two public utility companies has the potential to lower costs for customers through increased operating efficiency, but ratepayers need to see the results of those savings in their bills,” AG Coakley said. “In order to support this merger, we believe customers should be guaranteed a rate freeze or receive significant savings. These merger conditions are necessary to ensure that the companies’ shareholders don’t simply pocket the increased profits and guarantee that any benefits of the merger flow back to consumers.”
The AG’s Office also proposed several safeguards to protect ratepayers against certain potential harms that could arise from the merger. These safeguards call for specific accounting requirements on certain assets and merger related expenses, as well as limiting the effect on rates caused by the higher cost of debt that NSTAR would face in the combined business.
The AG’s Office also called on the DPU to require WMECo to refund $14 million in insurance fund distributions that the company failed to return to customers from a previous pending case. WMECo would also be required to file a proposal within six months of the merger that will address issues with the company’s rate structures that result in commercial and industrial customers paying significantly more than the actual cost to serve them.
NSTAR is the parent holding company of NSTAR Electric Company, which serves 1.1 million customers in Massachusetts, and NSTAR Gas Company, which serves 300,000 customers. Northeast Utilities is the parent holding company of Western Massachusetts Electric Company, which serves 210,000 customers.
The Attorney General’s Office of Ratepayer Advocacy serves as the utility ratepayer advocate and is authorized to intervene in administrative and judicial proceedings on behalf of consumers in connection with any matter involving the rates, charges, prices or tariffs of any gas or electric company doing business in the Commonwealth.