On July 6, 2011, the Federal Energy Regulatory Commission ("FERC" or the "Commission") approved the proposed merger of NSTAR and Northeast Utilities (the "Merger"). The newly formed utility will operate under the name Northeast Utilities.Previously, the two companies announced on October 18, 2010 that the Merger had been approved by the Board of Trustees for both companies (see the October 18, 2011 edition of the WER). The newly formed utility will serve about 3.5 million customers in Connecticut, Massachusetts, and New Hampshire.
FERC examined NSTAR and Northeast Utilities' January 7, 2011 application under Section 203 of the Federal Power Act in accordance with its Merger Review Policy Statement. FERC determined that the Merger was in the public interest, and approved the Section 203 Application. Several groups opposed the Merger, including NRG Energy Inc. and two trade groups representing merchant generators. Specifically, the protestors argued that FERC needed to review the merger for buy-side market concentration concerns as well as supplier market power, and either reject the Merger or impose conditions on buying power. FERC found that the Merger will have no adverse effect on competition and concluded that the Merger will have a de minimus impact on market concentration in the ISO-New England ("ISO-NE"). FERC did recognize, as the protestors noted, that under the Merger Policy Statement, a monopsony or buyer power analysis should be developed if appropriate. However, FERC found that the Merger does not increase the utilities ability to exercise buyer market power in the ISO-NE wholesale energy market, and thus, the Merger raises no monopsony concerns.
Additionally, FERC found that the Merger raised no vertical market power concerns, and will not adversely affect rates. FERC accepted NSTAR and Northeast Utilities' commitment to hold transmission and wholesale requirements customers harmless from costs related to the Merger for five years. Finally, FERC found the Merger would have no effect on regulation and did not result in any cross-subsidization.
A copy of FERC's order is available here.
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