It’s too early to know the impact on rates and customer service for Massachusetts customers of this week’s merger announcement between utility giants NStar and Northeast Utilities, a top state energy official said Tuesday.
“We’ll see. It’s too soon to tell right now,” Department of Energy Resources Commissioner Phil Giudice told the News Service. “We were informed on Sunday that this was going to be announced so we’ll wait and see what the details of it are.”
Giudice said the merger faced regulatory review before the Department of Public Utilities. He said he expected company officials will need to provide “very specific assurances” on rate and customer service issues. “That’s a good thing,” he said.
“The press accounts are not concerning one way or the other this time,” he said. “I can see the strategic merit of this kind of move but it’s going to be very important that we can address the issues that are most important for Massachusetts in the context of this.”
Under the $17.5 billion “merger of equals” announced by the two companies on Monday, the new company will have dual headquarter offices in Boston and Hartford, will serve 3.5 million customers and will feature 9,300 employees. The company will be called Northeast Utilities.
According to the two utilities, the merged companies plan to invest $9 billion in New England’s energy infrastructure over the next five years, “customers will not experience any merger-related rate changes,” collective bargaining agreements will stay in place and efficiencies will be realized “over time” through procedural improvements, voluntary attrition, and retirements. Northeast Utilities pledged to maintain the current level of funding for civic and philanthropic organizations across the combined service areas.
Headquartered in Hartford, Northeast Utilities has annual revenues of $5.4 billion and assets of $14.2 billion. Its companies serve 2.1 million customers in Connecticut, New Hampshire and Massachusetts.
NStar, based in Boston, serves 1.4 million customers in Massachusetts. It has annual revenues of about $3 billion and assets of $8 billion.
NStar and Northeast Utilities will operate six electric and gas utilities in three states, with nearly 4,500 miles of electric transmission lines, 72,000 miles of electric distribution lines and 6,000 miles of gas distribution lines. Northeast president and CEO Charles Shivery will become chair of Northeast Utilities and Thomas May, president and CEO of NStar, will become president and CEO of Northeast Utilities.
Company officials expect it will take nine to 12 months to obtain regulatory approvals and will seek shareholder approval of the transaction in early 2011. In addition to the DPU, approvals are needed from the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Securities and Exchange Commission, and the Federal Communications Commission.