Liberty Energy Utilities, a regulated subsidiary of Canada's AlgonquinPower & Utilities, will buy two New Hampshire utilities from National Grid for$285 million, Algonquin Power said Thursday.
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Word of the deal comes just two days after Algonquin Power receivedfinancing for its acquisition of the California utility assets of NV Energy.Algonquin entered into a joint venture with Emera in April 2009 to make thepurchase. Both acquisitions are part of a utility growth strategy theOntario-based company is pursuing.
Algonquin said it will acquire Granite State Electric and EnergyNorthfrom National Grid. Granite State Electric serves more than 43,000 customersin the state, while EnergyNorth distributes natural gas to more than 83,000customers in five counties.
Granite State has assets of $72 million and return on equity of 9.67%,while EnergyNorth has assets of $178.8 million and a 9.54% ROI, it said.
"The acquisition of these attractive businesses represent thecontinuation of [Algonquin's] regulated utility growth strategy and willprovide long-term, predictable ... earnings," CEO Ian Robertson said.
He described the New Hampshire regulatory environment as attractive,saying Algonquin already has a substantial presence in the state through itsrenewable energy business.
The company expects to close on the purchase and financing in the fall of2011, pending necessary approvals.
In early 2010, Algonquin bought 36.8 MW of hydroelectric assets in NewBrunswick and Maine from Integrys Energy Services.
National Grid said Thursday it is selling the utilities because of an unfavorable rate decision by the state Public Utilities Commission in 2009.
"Earlier this year we announced our intention to exit our New Hampshire businesses, which together represent less than 2% of our US rate base, througha competitive process," said Steve Holliday, National Grid CEO, Thursday.
The sale of the assets is in line with National Grid's "strategy ofimproving returns in the US and selling assets from our portfolio if otherssee more value in them than we can in the longer term," he added.
National Grid sought buyers for Granite State Electric and EnergyNorthbecause of the return on equity set by the PUC, said David Graves, a NationalGrid spokesman. Granite State's ROE is 9.67% and EnergyNorth's 9.54%.
"The return on investment was too low; it was marginal at best for us,"Graves said. "We didn't feel we could operate the company in the best interestof our customers or stockholders."
National Grid said it was approached by various parties interested inbuying the two utilities and following a competitive process, decided thatAPUC made the best offer. National Grid plans to use the cash from the sale tofund continuing investments within the company.
--Lisa Wood, firstname.lastname@example.org
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