State Returns To Court To Halt Utility Merger

HARTFORD — State Attorney General Richard Blumenthal returned to court Tuesday seeking to halt the merger of Northeast Utilities and Consolidated Edison until a judge rules on his claim that Con Ed is not a suitable manager for NU subsidiaries.

The new case seeks to block the Department of Public Utility Control’s approval of the merger until the New Britain Superior Court can consider a separate lawsuit Atty Gen Blumenthal filed in December claiming the $7.5 billion merger would be “illegal and unwise.”

“Like an omelet, once this merger is started, there’s no unscrambling the eggs,” he said. “If this takeover goes forward, undoing it later would be like trying to put the eggs back in their shells.”

Con Ed does “not possess the managerial suitability” to operate Connecticut Light & Power and Yankee Gas, Atty Gen Blumenthal said. The merger, which proposes the nation’s largest electric and natural gas utility with territory stretching across much of the Northeast, would fail to serve the public interest, he said.

A spokesman for Con Ed said the lawsuit is without merit and that Mr Blumenthal’s objections already have been rejected by the DPUC.

“Furthermore, independent industry experts have concluded that Con Edison provides the most reliable electric service in the country,” spokesman Michael Clendenin said.

State regulators approved the merger in October, but subject to a number of conditions, including rate cuts and other consumer benefits.

Mr Blumenthal said the conditions “cannot cure the harms and costs that make the takeover contrary to the public interest.”

Beryl Lyons, spokeswoman for the regulatory agency, would not comment on the attorney general’s lawsuit.

“Once it’s in court, we’re out of it,” she said.

The merger also involves Western Massachusetts Electric Co. and Public Service Company of New Hampshire.

Con Ed operates Consolidated Edison Co. of New York, which serves New York City and its suburbs. The company also owns Orange & Rockland Utilities Inc., which serves customers in Pennsylvania, New Jersey, and New York.

Separately, Mr Blumenthal and the Office of Consumer Counsel on Tuesday asked DPUC to reduce rates charged by United Illuminating, an electric utility that serves about 316,000 customers in the New Haven and Bridgeport areas.

The utility earns $13 million a year more than allowed in a rate-setting plan approved by regulators in 1996, he said.

“UI’s consumers deserve to have their rates reduced immediately,” Mr Blumenthal said.

Sandra Ahearn, a spokeswoman for the utility, said the attorney general is misrepresenting UI’s earnings.

The utility has complied with a five-year rate plan that calls for refunds of one-third of the utility’s profits over a certain amount. For a customer with an average $60 monthly electric bill that does not include heating costs, the refund is $2.35, or about 4 percent of the monthly tab, Ms Ahearn said.

The utility has paid $20 million in such customer credits since 1997 and will pay $18 million this year, she said.

Another one-third of the excess earnings is earmarked to speed up loan payments for construction projects. That, too, will save customers money, she said. The final third is returned to shareholders.

“The last couple of years have been good,” Ms Ahearn said.

She credited two unregulated utility businesses – a utility payment company and an electrical and voice data video service – with boosting profitability.

The utility’s success is “something we’ve worked hard to achieve and our customers are the better for it,” Ms Ahearn said.

Ms Lyons, who said state regulators are reviewing an over-earnings case filed against Connecticut Light & Power in December by Mr Blumenthal and the Office of Consumer Counsel, had not seen the attorney general’s most recent request.