PUC OKs Spanish utility’s acquisition of CMP parent

AUGUSTA – The Public Utilities Commission on Wednesday signed off on the $4.6 billion sale of Maine-based Energy East to Spanish utility Iberdrola SA in a deal that affects 3 million customers from New York to Maine.

Energy East is the parent of Central Maine Power Co., which provides electricity transmission and distribution services to about 80 percent of Maine residents.

As part of the transaction, Iberdrola will also acquire CMP subsidiary Maine Natural Gas.

“Consumers will see better service quality, new investment and support for conservation initiatives as a result of this transaction,” Kurt Adams, chairman of the PUC, said in a statement Wednesday.

Earlier this month, the utility companies, consumer advocates and labor unions negotiated a sale agreement and presented it to the PUC for approval.

Under the deal, which includes Energy East subsidiaries in other Northeastern states, Iberdrola would pay $4.6 billion and assume $4 billion in debt.

The sale agreement includes provisions on service quality that should lead to improved response to power outages and tree trimming maintenance, Adams said.

The agreement also bolsters the PUC’s jurisdiction over transmission management and infrastructure decisions, despite recent federal legislation that could pre-empt state authority. CMP has agreed to continue to defer to PUC authority over the siting of new power lines or other facilities.

“This agreement assures us that it’s Maine people who will make the decisions about whether and where power lines are sited in our state,” Adams said. “Just as importantly, CMP has agreed not to contest the Maine Legislature’s authority to make decisions about the state’s continued participation in the regional transmission system known as ISO-New England.”

In a report to the Legislature, the PUC contends the organization of the New England power grid is “fundamentally flawed” and that Maine could benefit from changes, including withdrawing from the power grid.

Final terms of the agreement were negotiated with PUC staff assistance. They include measures to guarantee the transparency of any financial activities by Iberdrola that might affect Maine consumers and commitments to invest in advanced technologies to manage or reduce electricity demand.

Parties that signed the agreement included Friends of the Coast, the Office of the Public Advocate, the Independent Energy Consumers Group, the Independent Energy Producers of Maine and the International Brotherhood of Electrical Workers.

Iberdrola, based in Bilbao in northern Spain, has said its acquisition of Energy East fits with its strategy of international expansion. New Gloucester-based Energy East owns utilities in New York, Connecticut, Massachusetts and Maine.

The New York Public Service Commission has yet to approve the transaction. Connecticut and New Hampshire regulators have already given approvals, and the Federal Energy Regulatory Commission has signaled its approval, as well.

The deal would represent Iberdrola’s first direct purchase of a U.S. utility. Iberdrola’s previous acquisition of Scottish Power gave it ownership of Oregon-based PPM Energy, which operates several wind farms in the U.S.

Energy East shares gained 8 cents to $26.03 Wednesday on the New York Stock Exchange.