Eversource Energy asked FERC to approve the combination of its two electric distribution utilities in Massachusetts, saying such a merger would save the company time and resources.
In 2012, Eversource, then known as Northeast Utilities, acquired Boston-headquartered NSTAR, whose principal subsidiary, NSTAR Electric Co., serves 1.2 million customers in the Boston area. Eversource already owned Western Massachusetts Electric Co., which serves 209,000 customers in western Massachusetts. On Jan. 13, the two entities applied to FERC for permission to combine into a single entity, with NSTAR Electric as the survivor.
"Specifically, the reorganization transaction will simplify the reporting requirements and reduce regulatory requirements that are currently applicable to each company," the Eversource utilities said in the application. "The reorganization transaction will also improve cost efficiencies by enabling the combined company to obtain lower-cost debt financing."
The two utilities already operate under a single president, they said in the application, and day-to-day field operations have been consolidated under common management. "However, NSTAR Electric and WMECO remain as separate entities with respect to their books and records of account, financial reporting, rates and regulatory mechanisms and processes. The legal consolidation of these two Massachusetts electric public utilities will reduce regulatory burdens associated with maintaining and reconciling multiple books and records, and submitting multiple state and federal filings and rate cases," they said.
Combining the two companies would reduce the number of annual electric filings made to state regulators by about half, they said, and would reduce the need for each company to file a retail rate case every five years, as now required in Massachusetts. It would also improve communications with customers, they said. They asked for FERC approval so they can complete the merger by Jan. 1, 2018.
On Jan. 17, the two utilities filed with Massachusetts regulators a performance-based ratemaking mechanism that calls for a base distribution rate increase of about $96 million and $400 million in grid modernization investments. Included in that proposal is a request for the Massachusetts Department of Public Utilities to approve the corporate combination as well.
Moody's on Jan. 23 said the combination would be "credit positive" for both entities because the single successor utility would benefit from operational, regional and administrative efficiencies. (FERC docket EC17-62, Massachusetts DPU docket 17-05)