Connecticut reverses itself, decides to exercise jurisdiction

Update courtesy of Utility Regulatory News #4055: Vacating an earlier order in which it had declined to review the proposed merger of two Massachusetts-based holding companies, the Connecticut Public Utilities Regulatory Authority (PURA) has determined that the transaction could have implications for two Connecticut-based operating subsidiaries, thus justifying PURA oversight. At issue is the planned acquisition of NSTAR by Northeast Utilities (NU). The two proponents had contended that PURA approval was not necessary because NSTAR has no operations in Connecticut, and NU’s two Connecticut subsidiaries, Connecticut Light & Power Co. (CL&P) and Yankee Gas Services Co., would remain as separate but wholly owned subsidiaries of NU. They maintained that since there would be no direct change in control of CL&P or Yankee Gas, PURA authorization was not required. Initially, the PURA agreed with that position. However, urged by various parties to reexamine the details of the proposed acquisition, the PURA discovered that the post-merger NU would be subject to a modified form of corporate governance, which clearly could have operational ramifications for CL&P and Yankee Gas. The PURA observed that the “new” NU will be relocating its headquarters to Boston and will have a different president and chief executive officer. Additionally, it noted that NU’s post-acquisition board of directors will be composed quite differently, so as to give equal representation to NSTAR nominees. Agreeing that those changes could significantly impact service policies and protocols applicable to CL&P and Yankee Gas, the PURA declared that its approval of the merger would be needed after all. For the full story, subscribe to URN.

Posted: January 30th, 2012 under M&A.
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Sept. 15, 2011

FOR IMMEDIATE RELEASE

Contact:
Michael Burr

burr@pur.com

320-632-5342
Public Utilities Reports, Inc.

Vienna, Va.: For three years running, Ohio-based utility DPL Inc. has delivered the best overall shareholder performance of any U.S. investor-owned utility company, according to a closely watched report published in the September issue of Public Utilities Fortnightly magazine.

The 7th-annual Fortnightly 40 Report (http://bit.ly/2011F40), sponsored by Accenture, ranked the four-year shareholder value performance of U.S. investor-owned utilities and merchant power companies. The C Three Group of Atlanta, which along with Public Utilities Fortnightly developed the F40 financial model, analyzed the annual reports of 82 power and gas companies to compare a series of shareholder-value metrics — such as profit margin, dividend yield, return on equity, return on assets and sustainable growth.

DPL, parent company of Dayton Power & Light, has held the #1 spot in the Fortnightly 40 report since 2009. DPL’s performance is distinguished by industry-leading returns on equity and assets, as well as strong free cash flow and profit margins. DPL’s perennial strength typifies the top ranks of the F40, according to Michael T. Burr, Fortnightly’s Editor-in-Chief. “Only two names changed in the top 10 ranks. Mirant exited as a result of its merger with RRI Energy, and Questar ascended to #3 by virtue of an asset spin-off,” Burr said. “F40 leaders have shown remarkable stability in performance for shareholders.”

Other movers in the F40 rankings include CLECO, Piedmont Natural Gas, and DTE Energy. DTE’s performance was strengthened by a 10-year program of cost control and operational improvements. In an interview for the report, DTE CFO David Meador told Fortnightly, “Technology deployed right will reduce costs and improve customer service.”

Rankings fell for gas pipeline company EQT and wholesale generator NRG. “EQT was weighed down by heavy spending on shale-gas development, while NRG’s rank was affected by its comparatively low returns on equity and assets,” Burr said.

Companies included in the 2011 F40 ranking include: AES, AGL Resources, Allegheny Energy, Alliant, AEP, Centerpoint, Chesapeake Utilities, CLECO, Delta Natural Gas, Dominion, DPL, DTE, Edison International, El Paso Electric, Energen, Entergy, EQT, Exelon, FirstEnergy, Gas Natural, Laclede, MGE, National Fuel Gas, NextEra, Nicor, Northwest Natural Gas, NRG, NStar, OGE, Piedmont Natural Gas, PPL, PSEG, Questar, RGC Resources, Sempra, South Jersey Industries, Southern Company, Southern Union, TECO, UGI, and WGL Holdings.

The 2011 Fortnightly 40 Report is available to subscribers at www.Fortnightly.com or http://bit.ly/2011F40. Trial subscriptions are available, allowing immediate access to the report.
# # #
PUBLIC UTILITIES FORTNIGHTLY (www.fortnightly.com), published by Public Utilities Reports Inc., in Vienna, Va., is the journal of record for the U.S. utility industry, providing authoritative, in-depth analysis of trends in generation, transmission and distribution of electricity and natural gas. For more than 80 years, Fortnightly has delivered expert analysis to help utility-industry executives and regulators decide where to invest, how the industry will be regulated and what the future holds. Subscription rate: $287/year.

Posted: September 15th, 2011 under M&A, Uncategorized, finance, regulation, utility stocks.
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Demands up-front ratepayer benefits

Weekly Update Courtesy of Utility Regulatory News #4005: On the heels of regulatory approvals from the West Virginia Public Service Commission and the Federal Energy Regulatory Commission in December, the Maryland Public Service Commission (PSC) has become the latest agency to authorize the acquisition of Allegheny Energy by FirstEnergy Corp.

The transaction, to be executed through a stock-for-stock exchange, was first proposed by the companies in February 2010, with a settlement agreement submitted to the Maryland commission in early December. Although the settlement addressed some of the objections initially raised by opponents, the PSC took issue with certain of the agreement’s terms, especially those relating to a residential rate credit, which the commission deemed grossly inadequate. The companies had proposed to share net merger savings with Allegheny’s Maryland customers in the form of a $1.625 million credit, to be allocated over the course of four years. Such a small sum spread out over 48 months would render the credit virtually meaningless, the PSC said, and could end up requiring ratepayers to repay their own credit. Instead, the commission ordered that the entire $1.625 million be paid out upfront in the form of a one-time $29 credit to each customer. Moreover, the PSC held that FirstEnergy must fund the billing credit and that it may not be recovered in future rates.

A number of other conditions were instituted as well, including continued commitments to local charitable groups, additional contributions to Maryland’s Electric Universal Service Program, and ongoing support for the EmPower Maryland initiative. For the full story, subscribe to URN.

Posted: February 7th, 2011 under M&A, regulation.
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PSC says state’s consumers bear unfair burden

Weekly Update Courtesy of Utility Regulatory News #3969: Pointing to long-standing problems with cost allocations among the various operating companies of the Entergy Corp., the Arkansas Public Service Commission has again exhorted Entergy Arkansas, Inc. (EAI) to spin itself off from its parent company and become a stand-alone entity.

The commission had first raised the prospect of such a move in February 2010, when it initiated an investigation into EAI’s possible withdrawal from the Entergy operating system. The commission indicated that it would like to see EAI serve as an individual utility and join either the Midwest ISO or the Southwest Power Pool. Although EAI’s president had offered assurances at a recent PSC hearing that EAI was seriously examining the option of restructuring as a stand-alone company, the commission noted that reports in the press and public statements from EAI appeared to show otherwise.

The commission expressed concern that maintaining the status quo places Arkansas ratepayers at a disadvantage because a disproportionate amount of common costs from Entergy’s systemwide operations are assigned to EAI. Citing figures showing that Arkansas ratepayers have subsidized Entergy customers in other states by more than $4.5 billion in the last 20 years, the commission asserted that a spin-off of EAI as a stand-alone entity would be the best way to assure that such improper cost allocations do not continue. For the full story, Subscribe to URN.

Posted: June 9th, 2010 under M&A, Uncategorized, finance, regulation, transmission regulation.
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Today ABB announced it would pay $1 billion to acquire Ventyx from equity firm Vista Equity Partners (see press release below). The deal values Ventyx at a healthy 4-times earnings ($250 million). During a conference call, ABB executives emphasized the company’s growth potential and the greater reach Ventyx would give ABB into smart-grid related software markets, particularly in the United States.

ABB emphasized the complementary competencies and market positions of the two companies (see slide). ABB CEO Joe Hogan said the companies have almost no overlap in their businesses.

Hogan said the Ventyx acquisition will help ABB provide services in an under-served operational niche. “When you get into the nuts and bolts of utilities, which are areas we know well, companies like Oracle and SAP tend to have trouble,” Hogan said.

Interestingly executives made virtually no mention of Ventyx’s advisors group, which the company has been building for the past year. Lee Van Atta, a v.p. in the group, wrote “Gas Market Outlook” for Fortnightly’s April Energy Risk & Markets department.-MTB

>>>

ZURICH, May 5, 2010: ABB, the global power and automation technology group, has agreed to acquire Ventyx for more than $1 billion from Vista Equity Partners to become a leading provider of software solutions for managing energy networks.

Ventyx, based in Atlanta, Georgia, is a leading software provider to global energy, utility, communications, and other asset-intensive businesses, offering a broad range of solutions including: asset management, mobile workforce management, energy trading and risk management, energy operations and energy analytics. The company also provides software solutions for planning and forecasting electricity needs, including renewables.

ABB will combine its related network management business within the Power Systems division, with Ventyx to form a single unit for energy management software solutions. By providing ABB with broader access to the utility enterprise management market, the acquisition triples the energy management software market available to ABB.

“The big advantage for energy companies, utilities and industrial customers is that they will now have a single supplier of enterprise-wide information technology platforms and power automation systems,” said Joe Hogan, ABB’s CEO. “The advantage for our shareholders is a cash-generating acquisition in an exciting growth market, with a strong management team, a highly complementary offering and geographic scope, and an attractive return on capital employed.”

Ventyx has a large installed base in the US market and Europe and operates in more than 40 countries. Its customers include leading power utilities in the United States and Europe as well as industrial businesses. The company employs 900 people and reported 2009 revenues of about $250 million.

The acquisition is in line with ABB’s strategy to pursue growth opportunities that complement the company’s product, technology and geographical portfolio. It is subject to customary regulatory approvals, and ABB expects the transaction to be completed in the second quarter. ABB intends to pay for the acquisition in cash.

“Combining Ventyx’s leading software suite with ABB’s systems and unparalleled domain knowledge of the power industry will create a business that is ideally placed to offer solutions that will help to meet the challenges of rapidly evolving energy networks,” said Vince Burkett, Ventyx CEO.

One of Ventyx’s key software applications gives utilities and grid operators the information they need to better match electricity generation with consumption, even at the household level. By generating real-time information on electricity demand, pricing and availability, Ventyx’s software enables a practical business model for utilities to generate revenues from smart grids and carbon trading.

Ventyx’s load forecasting software can also help to integrate large amounts of unpredictable renewable energies, such as wind and solar power. The company provides other asset management applications to fully integrate a utility’s business and enterprise systems across the entire value chain, and a comprehensive service suite to facilitate efficient resolution of network failures.

-XXX-

Posted: May 5th, 2010 under Current News, M&A, finance, smart grid.
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