Connecticut finally steps up to vet utility merger
By Rob Cox
The author is a Reuters Breakingviews columnist and a Northeast Utilities customer. The opinions expressed are his own.
More than a year after rubber-stamping Northeast Utilitiesā $4.7 billion takeover of NSTAR, Connecticutās regulators have decided, after all, to take a close look at the transaction, intended to create a $17 billion electric monopoly in New England. It took a couple of storms to expose Northeastās incompetence and prod the Nutmeg Stateās watchdogs into action. Now that theyāve woken up, they neednāt be shy of killing the deal.
The rap sheet against Northeast and its Connecticut Light & Power subsidiary is lengthy. Hurricane Irene last August and a freak October snowstorm left millions of residents without power, many for more than a week. Their experience contrasted poorly with what happened to customers of nearby power companies, including small municipally-owned utilities. Their tribulations occurred despite paying the highest retail electricity rates in the continental United States.
An independent report commissioned by Connecticut Governor Dannel Malloy documented myriad failings on the part of Northeast in preparing for the storms and dealing with their aftermath. Out-of-state emergency crews complained of poor coordination, and some even said they had not been paid after Irene, so declined to help two months later. The picture that emerges was of a hapless and unaccountable monopoly. Eventually, the head of Northeastās business in the state was let go.
After all this, itās no wonder Connecticutās regulators are finally questioning whether it is wise to allow the company to buy Massachusetts-based NSTAR and spread itself even more thinly. The Connecticut report, written by a former federal emergency official, listed 27 recommendations for Northeast to improve its planning, procedures, training, and performance. At a minimum, regulators should insist these be implemented before approving any deal.
The time needed to do that would extend far beyond the April 16 drop-dead date the companies set when they announced their merger in October 2010. But when corporations are granted monopolies that remove market-based competition, the quid pro quo is supposed to be exactly this kind of scrutiny from regulators. Connecticut would be doing its residents ā and others deprived of choice by similar monopolies across the nation ā a disservice if it fails to take a stand in such a clear-cut case.