RI regulators approve PPL acquisition of National Grid's Narragansett Electric

PPL Corp. secured the final regulatory approval needed to close its acquisition of Rhode Island utility Narragansett Electric Co.

The Rhode Island Division of Public Utilities and Carriers issued a report and order Feb. 23 approving a joint petition filed by PPL, National Grid USA and Narragansett Electric seeking authority to transfer ownership of the electric utility to an entity called PPL Rhode Island. (Docket No. D-21-09)

The transaction is part of a March 2021 asset swap agreement with London-headquartered National Grid PLC through which PPL completed the sale of its U.K. distribution utility, Western Power Distribution PLC, to National Grid for £7.8 billion in cash in June 2021. In turn, PPL management earmarked a portion of the $10.4 billion in net proceeds for the company's $5.3 billion acquisition of National Grid's Narragansett Electric.

PPL's stock slid Feb. 18 after a fourth-quarter 2021 earnings call during which executives offered "no guarantee" the deal would receive approval by a Feb. 25 target date. PPL and National Grid had achieved four of the five regulatory approvals needed to close the Rhode Island utility's sale prior to PPL's earnings call.

The Rhode Island Division of Public Utilities and Carriers adopted "all of the commitments" made by Pennsylvania-headquartered PPL as part of the merger application. These commitments include employee retention for at least 12 months and no significant change to the ownership and operation of electric and gas distribution assets.

"The only change will be that the management and control of Narragansett will shift from National Grid USA to PPL Rhode Island," the companies wrote in their petition.

PPL executives told investors and analysts that the company would provide an updated annualized dividend rate and growth projections during an investor day expected to be held after the Narragansett sale clears regulatory approvals. No specific date has been announced.

PPL on Feb. 18 announced a first-quarter dividend of 20 cents per share payable April 1, down from 41.5 cents per quarter in 2021.