Concessions speed utility merger
Northeast Utilities has agreed to a rate credit for customers, a separate rate freeze for distribution costs, $300 million for system improvements and other demands by Connecticut in exchange for state approval of the utility's proposal to buy Boston-based NStar for $4.9 billion.
It includes a $25 million rate credit, a freeze on certain other rates until December 2014, excluding $21 million in executive compensation from rates, and other stipulations.
Elected officials in Connecticut have been under pressure to cut electricity rates, which are among the highest in the nation. Gov. Malloy said the agreement provides "much-needed relief" for utility customers and businesses.
"It will help ratepayers and the economy for years to come," the governor said.
In the deal, NU agrees to transfer 1,000 acres of open space, including land on Hanover Road in Newtown and Skiff Mountain in Sharon, near the Kent border, into a preservation land trust.
The deal would give the towns where the land is located or a local land trust the option to buy the land if and when the company wishes to sell.
The merger deal must still be approved by Connecticut regulators. Energy Commissioner Daniel Esty said he expects approval in the next few weeks.
Connecticut officials say the $25 million credit for about 1.2 million customers of the state's largest utility, Connecticut Light & Power, averages $16 per customer.
Though it's a small amount, Attorney General George Jepsen said it's the beginning of more cost savings expected from the companies' merged operations.
Northeast Utilities also agreed that the first $40 million in storm-related costs related to the remnants of Tropical Storm Irene that hit Connecticut in late August and the October snowstorm will be excluded from rates.
The company has estimated the cost of both storms at about $260 million.
NU also agreed to not reduce the number of line workers in Connecticut and Massachusetts and spend $300 million in improvement to the electric distribution system. Of that, $100 million will be spent immediately.