National Grid and KeySpan Corporation filed a joint application last week with the U.S. Federal Energy Regulatory Commission (FERC), seeking approval of the proposed merger of the two companies. The filing, required by law, finds the merger is consistent with the public interest and addresses key concerns of the FERC in similar transactions. FERC approval is required for the transaction to close, estimated for early 2007. The application requests a FERC decision by late October.
In addition to providing the documentation and information required by FERC's regulations, the application demonstrates how the merger will have no adverse impact on wholesale competition. Also, the filing describes how the merger will cause no adverse impact on transmission and regulated wholesale customer rates or on regulation. The merger will also not result in cross-subsidization from regulated operations to unregulated operations. The analysis of the competitive impacts of the merger was done by an independent economist using the framework required by FERC.
On Feb 27, 2006, National Grid and KeySpan announced an agreement for National Grid to acquire KeySpan, materially expanding the size of National Grid's U.S. operations and creating the third-largest energy delivery utility in the United States, with well-balanced electricity and gas businesses serving nearly eight million customers in the New York State and New England regions.
National Grid is an international energy delivery business with principal activities in the regulated electricity and natural gas industries. In the U.S., National Grid transmits and distributes electricity and natural gas to nearly 4 million customers across 29,000 square miles of Massachusetts, New Hampshire, New York and Rhode Island. KeySpan is National Grid's fifth US acquisition. Previously, it had acquired New England Electric System and Eastern Utilities Associates (2000), and Niagara Mohawk (2002). Earlier this month, National Grid announced that it will acquire the Rhode Island gas distribution business of Southern Union Company. The company owns the high-voltage electricity transmission network in England and Wales and operates the system across Great Britain. It also owns and operates the high-pressure gas transmission system in Britain and, through its natural gas distribution business serves over 11 million meters in homes and businesses in Britain. In addition, it has a number of businesses operating in related areas such as LNG importation, wireless infrastructure for broadcast and telecommunications, property, metering and interconnectors.