The proposed purchase of Bangor Hydro-Electric Co. last week wasn’t a surprise: Spurred by mandated utility restructuring, widespread consolidations have been occurring in the electric utility industry for several years. The question before Friday was who would be the successful suitor. At first glance, anyway, it appears that Bangor Hydro’s management has chosen well.
Nova Scotia Power, which announced its intention to buy outstanding BHE stock at $26.50 a share, isn’t a well-known utility here, but it presents several advantages over others that could make it particularly suited to Maine. If nothing else, its size — several times larger than Bangor Hydro but still small compared with national players — means that its Maine affiliate would gain some savings from scale, but not get lost in the corporate infrastructure. It could remain an important piece of the expanded company, and management at NS Power already has recognized that Bangor Hydro could offer lessons in areas such as geographic information services, which the Maine company has invested in during the last couple of years.
The fact that Nova Scotia Power is, if not exactly a neighbor, at least from a region close to Maine suggests that it appreciates the challenges of delivering power under difficult winter conditions. It also, of course, has experience serving rural areas and has a distinct interest in the new natural-gas pipeline in Maine, of which it owns 12 percent.
At least as important as these traits, however, are the Canadian regulations that prohibit its utilities from being easily gobbled up by industry behemoths. With this protection, Bangor Hydro customers have the assurance of knowing that Nova Scotia Power is not about to become part of a huge corporation. Certainly, it will continue to grow, but its growth will be controlled, with its focus likely to remain in this part of North America.
The sale of Bangor Hydro cannot proceed without the approval of the Maine Public Utilities Commission, which in this case has a template to work from in the sale last year of Central Maine Power to Energy East. That experience should make the rules governing the Bangor Hydro sale more apparent. And like CMP, Bangor Hydro might offer customers increased rate stability through a long-term plan that provided for increases below the level of inflation.
In the tumultuous environment of electric utilities these days, that could provide some security for ratepayers, just as Nova Scotia Power appears to provide security for the future of Bangor Hydro.
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