By the end of the summer, Rhode Islanders could be receiving their gas and electricity from the same company.
National Grid's plans to buy the Rhode Island operations of New England Gas are moving along the regulatory tract without any significant hitch.
Westboro, Mass.-based National Grid USA said it will acquire the New England Gas operation from Southern Union for $498 million in cash, plus the assumption of $77 million in debt.
Southern Union, based in Houston, is the parent company of New England Gas. National Grid USA is owned by National Grid PLC of London.
The combined company would provide electricity service to 477,000 customers in 38 communities, and natural gas to about 245,000 customers in 33 communities. The two companies had combined revenues in Rhode Island last year of $1.24 billion.
(The purchase agreement does not include the New England Gas facilities in Massachusetts cities North Attleboro and Fall River that serve about 45,000 customers. New England Gas will continue to own those operations.)
A week after that deal was announced, National Grid said it would buy Brooklyn, N.Y.-based KeySpan Corp. for $11.8 billion. The two deals, if approved, would vault National Grid to the third largest energy company in the United States, with 7.8 million customers across Rhode Island, New York, Massachusetts and New Hampshire.
Both deals are subject to approvals by various federal and state regulators, but Rhode Island regulators have a say only over the New England Gas acquisition.
The state's Division of Public Utilities and Carriers is well into its review.
That agency, along with the state attorney general's office, have submitted dozens of written questions to both companies, seeking more details about the acquisition and its impact on customers and employees.
Two of the most significant questions seek to clarify how the merger will affect the cleanup of a contaminated site in Tiverton, and how much money the merged company will save customers as a result of eliminating duplicate functions.
The two companies had until Friday to submit their answers.
As to the cleanup, both companies maintain that New England Gas, which will continue to own operations in nearby Massachusetts, will pay for that cleanup if it is legally required to do so.
New England Gas's parent company, Southern Union, is being sued by Tiverton residents in U.S. District Court. The company has vigorously denied that it is responsible for the contamination.
The Rhode Island Department of Environmental Management has traced the soil contamination, which includes elevated levels of cyanide, arsenic and lead, to the burning of coal to produce gas during the early 1900s at the former Fall River Gas Co., which was subsequently acquired by New England Gas.
The DEM has ordered New England Gas to come up with three remediation plans, but the utility has contended that the order is invalid.
As for the savings, the companies continue to say they have not yet determined how much money the combined company can trim from its expenses as a result of the merger.
In a filing submitted April 10, National Grid said that long before it placed a bid for New England Gas, it had put together an estimate of savings if the two companies were combined. The estimate cited $1 million to $3 million annually in the gas business in Rhode Island and $12 million to $16 million on a system-wide basis.
National Grid emphasized that these were rough estimates. "It is important to emphasize . . . we did not prepare a detailed quantification of the numbers or conduct any formal study to support this estimate. Nor do we have one at this time."
The DPUC has scheduled two days of public hearings on the acquisition: June 29 and June 30, at 9 a.m. at the division offices on Jefferson Boulevard in Warwick.
John Spirito, the hearing officer who is overseeing the case, has set July 25 as the target date for a yes-or-no decision by the DPUC.
If the acquisition is approved, the companies plan to complete the deal on Aug. 25.
The documents related to the state's review of the acquisition can be found at http://www.ripuc.org/eventsactions/docket/d-06-13page.html
The other major energy company in Rhode Island is Star Gas Partners LP, which owns Petro Oil. That company is the largest heating oil distributor in the state.
Star Gas, based in Stamford, Conn., recently reported that it increased its profits in the second quarter of this year, but continued to lose customers.
Star Gas said it is reversing its reorganization plan of several years ago in which it centralized its call-center operations. That decision, the company has said, drove away some customers.
About 30 percent of all calls company-wide are now answered locally, rather than at the centralized center. Some local branches answer as many as 75 percent to 80 percent of calls, the company said. The goal is to have all calls answered locally, which will take several more months to achieve, the company said.
Unit holders of Star Gas recently approved a $56.3-million investment plan by Kestrel Energy Partners LLC to help shore up the finances of the company.
tbarmann@projo.com / (401) 277-7369
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