NEPGA Alleges Nstar-NU Merger Would Harm Competition

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January 6, 2011

The New England Power Generators Association, Inc. alleged that the merger of Nstar and Northeast Utilities will harm competitive energy markets, in a motion for intervention at the Massachusetts DPU (Docket 10-170).

NEPGA said that it would raise similar concerns in Connecticut, New Hampshire, and Maine.  In Connecticut, the DPUC had earlier determined that Department approval of the merger is not required, though it is re-examining this question after a petition for declaratory order from the Office of Consumer Counsel.

In particular, NEPGA said that, "[b]oth NU and NStar officials have, on record, stated their intention to pursue rate-base investments in generation."  Such statements have particularly contemplated renewable investment, whose ownership by utilities is expressly permitted by Massachusetts and Connecticut (where a need is found) law.

"Such intentions run contrary to the principle of competitive procurement and, if carried out, would create significant impediments to innovation and private investment in both traditional and renewable energy in New England," said Angela M. O'Connor, President of NEPGA.  

In testimony before the DPU, the applicants said that the merger will not adversely impact retail competition.

"Completion of the Proposed Merger will not have any adverse impact on retail competition in Massachusetts.  NSTAR Electric, NSTAR Gas and WMECO have established comprehensive internal processes in order to conduct business transactions with competitive suppliers serving customers on each distribution system.  These internal processes are consistent with the protocols established by the Department since the enactment of the Electric Utility Industry Restructuring Act of 1997 and will be maintained as such following the completion of the Proposed Merger," the applicants said.

"In addition, neither NU nor NSTAR, nor their operating companies, compete for retail customers in Massachusetts," the applicants said.

NEPGA further claimed that the merger, "may inhibit alternatives to ratepayer-funded transmission projects, leading to unnecessarily higher long term sunk costs forced on consumers when local generation is both viable and more economic."  Nstar and NU are already partnering on a transmission line to access power from Hydro-Quebec.

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