Power play over utility cos. merger

State officials and Cape Wind supporters are keeping the pressure on Nstar, whose $4.6 billion merger with Northeast Utilities will be dissected in a series of make-or-break regulatory hearings starting tomorrow. The Massachusetts Department of Public Utilities will hear testimony and cross-examinations in a key review that comes nearly nine months after the companies announced plans to become one of the nation's largest utilities.

In February, the state Division of Energy Resources successfully delayed the hearings and later convinced the DPU to toughen its standard for the merger - even after regulators received the companies' petition - and help advance the Patrick administration's green-energy agenda.

Then the energy agency made an 11th-hour push to postpone the DPU hearings or even dismiss the merger petition outright because it claimed the companies didn't produce "responsive answers" about their greenhouse gas emissions.

"This has gone on longer than is normal, and the process has taken some twists and turns in terms of a new standard," said Nstar CEO Tom May. "We have a whole host of things in our testimony that clearly meet the standard that the companies will become more efficient ... but also have positive impacts on the environment."

The merger will pass muster if it offers "net benefits" to customers and the environment rather than the old DPU standard of "no net harm."

"From our perspective, what is important ... is to make sure that in fact the applicants meet that standard," said Mark Sylvia, commissioner of the Department of Energy Resources. "We reviewed the initial documentation provided, and we felt that more was needed for us to make an informed decision."

Boston's Nstar and Hartford-based Northeast Utilities, led by CEO Chuck Shivery, are pushing solar projects and a hydroelectricity transmission line from Quebec to lower greenhouse emissions. Nstar has lined up land-based wind energy sources, subject to a separate DPU review later this summer, but has conspicuously bypassed Cape Wind.

The developer of that controversial offshore wind project lined up National Grid to buy half of the energy it would produce, but has been unable to find a buyer for the other half, hurting its chances for construction financing.

When asked about the Cape Wind undercurrent in the DPU review, Sylvia said the offshore energy project and the merger are "apples and oranges."

Susan Reid of the Conservation Law Foundation, a Cape Wind proponent, criticized Northeast Utilities' coal-fired power plants in New Hampshire and said it would be "difficult" for the utilities to meet their renewable energy obligations "without offshore wind."

"We are looking to the DPU to really take a hard look and ask the hard questions," Reid said. "I think there are really significant climate implications for this merger and we want them to be taken into account."

The DPU hearings will stretch across at least nine days through late July, and the three commissioners do not have a deadline for giving the merger a thumbs up or down.

"I don't think it's good to drag on and on," May said of the longer-than-usual merger review. "I think it sends a bad message to businesses in Massachusetts and sends a bad message to investors on Wall Street.

"The market has received this merger very, very well. They think it makes tremendous sense for this region," he said. "You hate to lose that luster, so to speak, of all of the positive reactions."