NEW BRITAIN -- Connecticut utility regulators have given tentative approval to the $3 billion acquisition of New Haven-based UIL Holdings Corp. by Spanish energy giant Iberdrola.
The state’s Public Utilities Regulatory Authority issued its 45-page ruling Tuesday with numerous conditions that Iberdola must meet as a requirement for approval. A final decision on the merger by PURA is scheduled for Dec. 9.
In addition to a final decision by PURA, the merger also needs the approval of UIL Holdings shareholders, who are scheduled to vote on the deal Dec. 11, said Michael West, a UIL Holdings spokesman. The deal also must be approved by Massachusetts utility regulators because UIL Holdings has a utility company, Berkshire Gas, in that state.
“We have requested a decision be made by mid-December,” West said of Massachusetts regulators. “They do not operate on the same kind of statutory time line as Connecticut does.”
Conditions set for the deal include:
• Bill credits totaling $20 million to customers of UIL Holdings subsidiaries United Illuminating, Southern Connecticut Gas, Connecticut Natural Gas in the first 12 months after the merger closes.
• An additional $12.5 million in credits to CNG customers over a 10-year period starting in 2018.
• An additional $7.5 million in credits for SCG customers over the same period, plus $1.6 million in savings to ratepayers of the natural gas company associated with the utility’s replacement of portions of its natural gas mains.
• A freeze in distribution rates for UI customers through Jan. 1, 2017, and for customers of CNG and SCG through Jan. 1, 2018.
• A $2 million annual contribution for three years to Connecticut’s Clean Energy fund. The money would be used to promote public and private investment in such activities as improving energy efficiency and expanding renewable power offerings.
• An independent certification every three years that Iberdrola is in full compliance with the rules, regulations and requirements of the World Bank and five other international banking organizations, an apparent response to concerns PURA commissioners had raised about the Spanish company being at the center of five recent cases of fraud and corruption around the world.
• UIL and its subsidiaries must keep charitable and philanthropic giving at a level between $500,000 and $800,000 over the next four years.
• Hiring 150 people, either as permanent employees or contractors, in the first three years after the merger.
• Fund a $30 million cleanup of the former English Station power plant in New Haven. If the cost of cleaning up the defunct power plant site, which is located on an island in the middle of the Mill River, is less than $30 million, the two merger partners agree that they will turn over the remaining amount to the state “for a public purpose to be determined by the governor, Connecticut’s Attorney General and the commissioner of the Department of Energy and Environmental Protection.”
New Haven Mayor Toni Harp called the PURA ruling on the merger “promising.”
“Subject to any last minute changes, this (ruling) helps all of us in New Haven stay hopeful that a final ruling next month will lead to an English Station clean up at last,” Harp said in a statement. “I want to thank the Office of Consumer Counsel, the Attorney General and the governor’s office for keeping New Haven’s best interests in mind.”
Connecticut Attorney General George Jepsen said he was “pleased” by PURA’s ruling in the draft decision.
“The revised application provided for a number of ratepayer protections, including guarantees that local management control will be maintained and the local utilities will be ‘ringed off’ from financial risks flowing from the parent companies,” Jepsen said in a statement. “In addition, the companies committed to substantial short and long-term benefits, including ratepayer credits and customer service improvement, that PURA will have the ability to monitor and enforce, ensuring that the company operates responsibly and in the public interest. “
Jepsen and DEEP officials, along with Connecticut Gov. Dannel Malloy, negotiated the consent order to clean up English Station. That deal was announced in September and was subject to the merger of the two companies being approved by PURA.
Connecticut Senate President Martin M. Looney, D-New Haven, said the cleanup of English Station “is long overdue.”
“Today’s draft decision represents a major environmental victory for the Fair Haven community and the City of New Haven,” Looney said in a statement. “I look forward to the day when the remediation is complete.”
If the deal receives all the remaining regulatory approvals it needs, James P. Torgerson, president and chief executive officer of UIL Holdings, would become the head of Iberdrola’s entire U.S. utility operations, but be based in New Haven.
Iberdrola’s American subsidiaries are Central Maine Power Co., Maine Natural Gas Corp., New York State Electric & Gas Corp., and Rochester Gas and Electric Corp.