It's been 15 years since regulators last intervened in such a deal.
State regulators look poised to reject a $3 billion foreign takeover of Connecticut’s second largest utility.
The Public Utilities Regulatory Authority issued a draft decision saying Spanish giant Iberdrola hasn’t provided measurable assurances that United Illuminating ratepayers won’t be harmed by the deal.
In particular, they’re concerned that the Connecticut company could be at risk from financial problems elsewhere in Iberdrola’s international holdings. The draft ruling said that the two potential partners were in effect asking for a "leap of faith" into the unknown.
Such rulings on merger activity are very rare. It’s been fifteen years since regulators last intervened in such a deal. In 2000, the panel imposed conditions on the planned takeover of Northeast Utilities by New York's ConEdison. In the light of its ruling, ConEdison walked away from the deal.
The draft ruling on the Iberdrola deal has been lauded by some state officials.
Consumer Counsel Elin Swanson Katz issued a statement:
We welcome PURA's decision as a strong statement that our regulated utilities should put customers first, and stay true to their mission of serving Connecticut residents and businesses,” she said . “This proposed takeover, which would have provided almost $600 million to shareholders but no meaningful benefits to UI's consumers, was properly rejected by PURA as not in the public interest, and we respectfully urge PURA to reject the acquisition in its final decision.
UI CEO James Torgerson said he's disappointed with the ruling:
We are carefully reviewing the draft decision," he said in a statement. "While the current draft language would, if adopted as final, deny the change of control of UIL, the draft decision also provides an opportunity to UIL and Iberdrola to address the concerns that PURA expresses in the draft decision. We look forward to providing clarification and additional information to PURA quickly.
PURA's final decision is due July 17.
