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Top state Assembly officials sent a message Wednesday that they want to make sure that Niagara Mohawk's customers get some benefits from the utility's proposed $3 billion merger with National Grid Group Plc.

With Niagara Mohawk shareholders poised to reap a 37 percent premium from National Grid's merger offer and the London-based power company's U.S. operations set to double in size to become the nation's ninth biggest electric utility because of the deal, state Assembly leaders don't want NiMo customers to be forgotten.

"We want to make sure that NiMo customers benefit as well," Speaker Sheldon Silver, D-Manhattan, said during the first of three hearings that the Assembly plans to hold on the proposed merger.

"In the past, it seems that ratepayers have been forgotten," Silver said during the hearing in the Buffalo and Erie County Historical Society. "How do we put the customer first?"

Assemblyman Paul D. Tonko, D-Amsterdam, the chairman of the Assembly's energy committee, said the merger assures Niagara Mohawk shareholders that they will end up better off than they were before the deal was disclosed because National Grid's $19-per share offer is well above NiMo's stock price before the Sept. 5 announcement.

"While this acquisition promises a 37 percent return for shareholders, there is no such guarantee for consumers," Tonko said.

But even with the merger bid, many long-time NiMo shareholders still have losses on their investments after enduring two dividend eliminations and a 37 percent drop in the price of the troubled company's stock over the last 14 years.

Silver and Tonko joined other top New York politicians, including U.S. Sen. Charles Schumer and state Attorney General Eliot Spitzer in urging the state and federal regulators who must approve the deal to make sure that consumers see some benefits from the merger.

William F. Edwards, Niagara Mohawk's senior vice president and chief financial officer, said consumers should benefit from improved service and efficiency because the merger should put Niagara Mohawk on stronger financial footing and allow it to make more investments in its operations.

"It is Niagara Mohawk's intention to assure that this merger will create benefits for all of our constituents," he said.

But a top National Grid official said the merger, which is expected to create about $90 million in savings over the first four years and lead to the elimination of 500 to 750 jobs, is not guaranteed to lead to lower rates.

"It's just too early to speculate on what this will mean to customers in their bills," said Lawrence Reilly, National Grid USA's senior vice president.

Gerald A. Norlander, the executive director of the Public Utility Law Project in Albany, said regulators should use the merger as a reason to review Niagara Mohawk's current five-year rate agreement, known as PowerChoice.

That rate plan, now in its third year, has reduced residential rates by 3.3 percent over the last three years and will cut rates for the biggest industrial customers by 25 percent over five years.

But the plan allows Niagara Mohawk to raise residential rates by up to 1 percent during the fourth and fifth years. And provisions in PowerChoice that have protected NiMo consumers from the sharp spikes in electricity prices that have plagued consumers in New York City and California this summer are on the verge of being eliminated.

That could subject NiMo customers to sharply higher electric bills that could offset any savings that consumers might otherwise receive from the cost savings produced by the merger, Norlander said.

"There's good reason to change it now," he said. "The bills could be much higher in the summer of 2002."

Thomas J. Primero, the president and business manager of Local 97 of the International Brotherhood of Electrical Workers, which represents 4,900 NiMo employees, said the union has "significant concerns" about the proposed job cuts that could result from the merger.

While Reilly said National Grid hopes to reach those job cut targets through attrition and voluntary incentives, Primero said he hopes state regulators will insist on a provision that prohibits involuntary layoffs as a result of the merger. Connecticut regulators included a similar provision before approving the Consolidated Edison-Northeast Utilities merger.

The Assembly also will hold hearings on the merger in Syracuse and Albany.

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