Attorney General George Jepsen Statement

To The PURA About Proposed NU-NSTAR Settlement And Merger

Good morning, and thank you for allowing me the opportunity to discuss this landmark settlement we have reached with Northeast Utilities and NSTAR.  I am here to urge you to approve this settlement agreement, which assures that the merger will occur in a manner that best serves the public interest in Connecticut.

Let me begin by thanking you for exercising your clear jurisdiction to review this merger.  That important decision created the opportunity to negotiate a settlement that provides real and meaningful benefits to our State and our ratepayers.

My Office, Consumer Counsel Elin Katz and her Office, together with the Governor seized that opportunity.  I am proud of our work.  Together, we sat down with the Companies, rolled up our sleeves, and came up with an agreement that protects and benefits the State of Connecticut and the people of the State.

You have read the settlement and so I do not intend to walk you through the details of each individual provision.  You are well aware that the agreement provides approximately $120 million in concrete financial benefits to Connecticut residents in a variety of forms.  Specifically, this settlement includes the following:

-CL&P ratepayers will receive $25 million up-front to reflect their initial share of projected merger savings;

-Connecticut will receive $15 million to support and promote the State’s energy policy goals;

-Distribution rates will be frozen for two and one-half years;

-NU will permanently preserve open space worth $20 million;

-NU will accelerate its investment in needed infrastructure improvements;

-NU will not seek to recover $40 million of its 2011 storm recovery costs from ratepayers;

-NU will maintain jobs, headquarters and charitable/civic commitments in the State;

-NU will not charge Connecticut ratepayers for Cape Wind and other Massachusetts initiatives; and

-NU officer severance/retention payments totaling about $20 million will not be recovered from rate payers.

The agreement was hashed out over multiple negotiation sessions that were marked by very frank and candid exchanges of ideas.  The settlement that you now see is the result of a lot of hard work, late meetings and substantial give-and-take on all sides.

As a result, like any settlement of a complex matter, it must be read as a whole.  I urge you to bear this in mind as you review the individual provisions in the settlement. 

My focus was always on ensuring that the interests of the State of Connecticut and the people of the State were protected, and this settlement does that.  I believe this is a win for the State of Connecticut, while it also protects the legitimate financial interests of the merging companies.

“I realize that comparisons to the settlements in Massachusetts are inevitable, and I am proud to stand by our agreement in Connecticut.

As you know, the only relevant question before you is whether this settlement, as proposed, meets the Connecticut legal standards; in particular Conn. Gen. Stat. § 16-47 (which assesses the managerial, technological and financial suitability of the merger) and Conn. Gen. Stat. § 16-22 (which requires a finding that the merger is in the public interest).

I firmly believe that the merger of NU and NSTAR, if approved subject to the terms and conditions of the settlement, satisfies these legal requirements and urge your approval.

Finally, let me also make clear that you have full authority to approve all of the terms of this settlement.  You have broad authority under a number of statutes (Conn. Gen. Stat. §§ 16-47, 16-22 and 16-11) to impose these conditions for the approval of the merger.

Moreover, this body has exercised that authority in the past in merger cases that were not presented as settlements, most notably the NU-ConEd decision in Docket No. 00-01-11. 

Thank you again for allowing me to express my support for the proposed settlement.

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