By William Opalka
Iberdrola USA has refiled its acquisition plan for UIL Holdings with Connecticut regulators, attempting to address objections that scuttled the previous plan.
The plan, filed Friday with the state Public Utilities Regulatory Authority, promises more ratepayer benefits, increased employment in Connecticut and protections for the state subsidiaries from any financial difficulties encountered by Iberdrola’s other U.S. or international operations (15-07-38).
The lack of “ring-fencing” protection for the electric distribution company, United Illuminating, in the original February filing was one of the deal-killers that PURA staff cited in its draft decision that recommended rejection of the deal. (See Iberdrola Withdraws UIL Acquisition; Plans to Refile.) “Ring-fencing measures will protect the UIL utilities from unforeseen potential future events affecting the IUSA affiliates or their other affiliates, including utilization of a special purpose entity and a ‘Golden Share,’” the filing states. The Golden Share would be held by an independent director from outside the company who would essentially hold veto power over any voluntary bankruptcy petitions filed by UIL.
The proposal also says the utility units will be rated by the credit rating agencies and will issue their own debt. “As a result, UIL and the UIL utilities will be maintained as separate entities and be afforded with important financial and bankruptcy protections.”
“With this new application, we believe that we’ve effectively addressed all of the points of concern that were outlined in PURA’s draft decision relating to the original application,” James P. Torgerson, UIL’s president and CEO, said in a statement. “We are fully prepared to move forward in this process.”
Other proposals to smooth the approval include:
- Customer rate credits of $20 million in the first year following the closing, or greater amounts spread over longer time periods;
- A new management position drawn from the ranks of existing local management and based in the state, titled president of Connecticut operations;
- Connecticut operations would be headquartered in the state for at least seven years;
- No involuntary terminations, except for cause or performance, in Connecticut for at least three years following closing of the deal, along with a commitment for 150 new employees;
- A freeze of electric distribution rates until Jan. 1, 2017; and
- $6 million over three years for the state’s clean energy initiatives.
Under Connecticut law, regulators have 120 days to act on the filing.