Northeast Utilities (NU) agreed to freeze rates and spend $300 million on reliability improvements to win support from Connecticut officials for its $5.05 billion purchase of Nstar.
“The agreement we’re announcing today does many things, but most importantly it will ensure that distribution rates for our consumers will stay flat for two-and-a-half years, providing some much-needed relief for residents,” Connecticut Governor Dannel Malloy said in a press release today.
The settlement is between the companies, the governor, the state attorney general and consumer counsel. It needs approval from the state’s Public Utilities Regulatory Authority. The Connecticut regulator decided in January it would review the takeover after an October snowstorm cut power to Northeast Utilities’ customers in the state, some for more than a week.
Northeast Utilities, based in Springfield, Massachusetts, and run from Hartford, Connecticut, agreed to buy Boston-based Nstar (NST) in October 2010 to create New England’s largest utility owner. Final regulatory approval for the transaction is pending in both Massachusetts and Connecticut, the last needed to close the deal.
Northeast rose 1.2 percent to $37.55 at the close in New York. Nstar rose 1.2 percent to $49.18.
The agreement freezes distribution rates until Dec. 1, 2014, according to the release. The companies also agreed to keep Northeast Utilities’ headquarters in Hartford for seven years and to maintain the aggregate number of line workers in Connecticut and Massachusetts.
The companies committed to investing $100 million annually for three years to improve the electric distribution system and $120 million in rate relief for Connecticut customers, including $25 million in rate credits for homes and businesses.
Last month, Northeast Utilities agreed to freeze power rates for four years, issue customer refunds and buy electricity from an offshore wind project as part of a settlement that is awaiting approval from Massachusetts regulators.
Connecticut regulators have scheduled an April 2 final decision on the takeover. Northeast Utilities has asked Massachusetts officials to approve the merger April 4, Chairman and Chief Executive Officer Charles W. Shivery told investors on a Feb. 24 conference call.
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