In a little over a year, the electric utility industry has seen six significant mergers.1 This trend toward consolidation most likely will increase as the industry becomes more competitive. Consequently, more state commissions (PUCs) will be charged with reviewing the implications of mergers for both shareholder and ratepayer interests.
The difficulty for regulators in any merger review lies in ensuring that "pre-merger" promises truly represent "post-merger" realities. To do this, regulators should maintain a healthy dose of objectivity, and perhaps a little skepticism. Any promises made during merger proceedings should be held to the strictest accountability. As the New Hampshire PUC so aptly notes:
"[P]romises must be weighed in accordance with the underlying financial strength of the enterprise. This ensures that our evaluation is an objective analysis of the merits of the proposed acquisition. To do otherwise would be to risk illusory benefits to ratepayers based upon unsound fundamentals."2
While each merger is unique, all regulators must address one common question: Is the proposed merger in the public interest?
The Public Interest