With a staff report in hand, the Public Utilities Commission will decide in the next week whether to approve the $957-million merger between CMP Group and Energy East, the New York firm that wants to buy Maine’s largest supplier of electricity. The outcome of this case should be instructive because it will show how the commission will balance the advantages of a more competitive energy environment against the need to protect consumers.

Energy East offered in June to buy CMP stock at prices well above trading levels, pushing the cost of the purchase 77 percent above the presumed or book value of the company. The deal requires approval by Maine’s PUC, which is instructed by statute to ensure ratepayers do not suffer increased costs or reduced service as a result. CMP pledges through a new seven-year plan to maintain service and keep any rate increases below the rate of inflation, but the proposal is vague on how the new company would recover the cost of the merger.

The PUC has the challenge under the merger of trying to regulate a company that will answer to and benefit from an out-of-state firm and should ensure safeguards are in place to protect service quality for customers. But the question the PUC examiner has spent the most time on in hearings this fall is whether the commission should be concerned in detail with the cost of the merger or simply prevent those costs from affecting consumers. The commission’s staff wrestled with this problem and decided the possibility remained that Energy East may try to recover some of its acquisition premium through rates or that increased earnings above a certain level that could have gone to reducing rates might instead be used to pay the premium. It suggests, in one alternative, that Energy East provide more information about the expected savings.

The concerns are reasonable, but are outweighed by changes in the industry that soon will affect not just energy suppliers but how the public views the delivery of electricity; it is an evolution from the old monopoly model to one that accounts for the influences of the marketplace. So just as shareholders reaped the large majority of the merger’s benefits, for instance, they must also accept the risk that the merger’s efficiencies will not be sufficient to cover its cost. While it is true that the state is unlikely to allow a utility to fail financially, the expanded number of resources as the result of the merger actually mitigates against this occurrence. Further, the PUC itself has the final word rate on increases. It can decide whether any proposal to raise rates is prompted by the merger, and it is obligated under Maine statute to say no if it is.

So should Maine care how Energy East recoups its investment? Only so far as the company can demonstrate that its plan falls within generally accepted business practices and assumes a level of savings from efficiencies borne out by similar mergers elsewhere. After that, the risk of the merger falls to stockholders.