Fortnightly’s 2013 ranking of shareholder value performance shows substantial changes, with gas prices weighing on some utilities and elevating others.
Stranded Costs, Part 2. Citing likely financial harm for the utility and further litigation on constitutional claims, a federal appeals court upheld an injunction won earlier by Public Service Co. of New Hampshire to postpone the state's electric industry restructuring plan, implying less-than-full stranded cost recovery. The court found at least "fair grounds" to consider the company's arguments that the plan might violate the Contracts Clause of the U.S. Constitution and doctrines of federal preemption. It noted claims by P.S.N.H. that the plan would lead "almost immediately" to default on various lines of credit, and push the company "rapidly down the slope to near-term bankruptcy." Re P.S.N.H. et al., No. 98-1764, Dec. 3, 1998 (1st Cir.).
QF Contracts. Before an electric utility buys power from a qualifying cogeneration facility (QF), it can first require assurance that the QF will reimburse the utility properly. This would happen under a mechanism that awards credits to the utility if its avoided costs fall significantly below the agreed upon contract price for purchased power, the New York Court of Appeals ruled. Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., N.Y. Slip Op. 10518, 1998 WL 824560, Dec. 1, 1998 (N.Y.Ct. App.).
Mergers and Acquisitions
MidAmerican + CalEnergy. The FERC approved the merger of MidAmerican Energy Co. and CalEnergy Co. Inc. (the latter would take on the former as a wholly owned subsidiary). MidAmerican provides retail electric service to customers primarily in Iowa and also provides wholesale requirements to several municipal utilities. CalEnergy is an independent power producer which, through nonregulated subsidiaries, manages and owns interests in more than 5,000 MW of generation worldwide. Docket No. EC98-63-000, Dec. 16, 1998, 85 FERC ¶61,354.
ScottishPower + PacifiCorp. ScottishPower, headquartered in the U.K., announced Dec. 8 that it would pay $12.8 billion to take over U.S.-based PacifiCorp. The combination would create one of the world's 10 largest utilities. Each share of PacifiCorp will be exchanged for either 0.58 American Depositary Receipts or 2.32 Scottish Power ordinary shares. Scottish Power shareholders would own 64 percent of the merged company, and PacifiCorp shareholders would own 36 percent.
BEC + Commonwealth. BEC Energy, parent company of Boston Edison Co., on Dec. 7 announced it would acquire Commonwealth Energy System, parent company of Cambridge Electric and Canal Electric, for $950 million. The merger calls for BEC Energy shareholders to exchange each share for one share of the unnamed holding company, or $44.10 in cash, a 5 percent premium. Commonwealth shareholders would exchange each share for 1.05 shares of the new company, or $44.10, a 17 percent premium.
National Grid + NEES. National Grid Group plc will take over New England Electric System for approximately $3.2 billion, according to an announcement issued Dec. 14. National Grid reportedly will acquire all outstanding shares of NEES for $53.75 per share, representing a premium of 25 percent above the closing price for NEES shares on Dec. 11. The deal would make NEES a wholly owned subsidiary of National Grid, the world's largest, privately owned transmission company, which operates high-voltage networks in England and Wales.