Washington regulators approve Puget Energy merger

Washington state regulators approved the $ 7.4-bn merger of Puget Energy, parent of power and gas utility Puget Sound Energy, to an international consortium led by Macquarie Capital.
Puget Sound Energy will continue to be regulated by the Washington Utilities and Transportation Commission, which imposed 78 conditions and commitments on the deal, UTC chairman Mark Sidran said.

The consortium of buyers, called Puget Holdings, is made up of Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board, British Columbia Investment Management, as well as Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Bank. The merger will give the Bellevue, Washington-based utility that serves more than 1 mm electric and 750,000 gas customers about $ 5 bn to make new investment in the next five years, the company said.
"We are gratified we got the decision. It is 150 pages and we have to carefully review it, but now we can have clarity to move forward," Puget Energy spokeswoman Martha Monfried said.

The deal could close in early 2009 and includes a $ 10 mm rate credit for rate payers, she said. In the 2-1 opinion, the UTC concluded the sale is "consistent with the public interest" and will not harm ratepayers, the legal standard for approval of such sales.
"We arrive at the same conclusion reached by parties representing environmental interests, low-income customers, industrial and large commercial customers and the commission's independent staff: the settlement is consistent with the public interest and the transaction should be approved," the UTC said in its approval.

Commissioner Philip Jones opposed the sale, and filed a separate dissent.
"The settlement agreement in its current form creates too much risk, and potential harm, for ratepayers and stakeholders. I believe the settlement has been overtaken by market conditions that require further exploration on a full record that carefully analyzes critical aspects of the proposal under the reality of extremely adverse financial conditions that exist today," Jones said in his dissent.

The merger approval came over the objections of Simon Fitch, public counsel for the state attorney general, who said after the order was issued, "our initial review leads to disappointment. The commission's order concludes that certain conditions and clarifications stated on paper will be sufficient to protect customers. The question now is whether they will be enough in the real world."
The public counsel has long opposed the deal, believing Puget would assume too much debt.