But, the judges continued, they “emphatically do not view this case as a plebiscite or, even more inappropriately, a popularity contest between Central Hudson and Fortis.”
Addressing the issue of customer relations, the judges noted that “one of the proposed transaction’s unquantifiable but highly material risks or detriments” of the merger is that Central Hudson in its present form would likely manage both its present and future functions better than “a new corporate regime that already has produced the fierce public hostility evidenced in hearings and comments.”
The judges later wrote: “Moreover, during most of the time that the petition has been pending, Petitioners have made little [effort] as far as we can discern to forestall or defuse public opposition, and that apparent passivity itself lends credence to public objections that the new parent company would not appreciate the importance of maintaining customer satisfaction.”
Central Hudson responds
In a release issued Monday, Central Hudson states it “will continue working toward approval of the merger of its parent company, CH Energy Group, Inc., with a subsidiary of Canadian utility holding company Fortis Inc., despite the advisory opinion…recommending against the transaction in its current form.”
“Together with Fortis, we intend to file exceptions regarding several conclusions in the recent Recommended Decision that are simply not supported by the record in the proceeding. We welcome the opportunity to participate in further discussions with the Department of Public Service and other parties in order to gain approval of the merger agreement,” stated CH Energy Group Chairman, President and CEO Steven V. Lant. The press release further states, “Central Hudson believes that the concerns expressed in the Recommended Decision can be successfully resolved, and that the transaction is still expected to close during the second quarter of 2013.” Lant and four other top Central Hudson executives stand to get $25 million in cash and stock if the deal is approved as currently proposed.
Jen Metzger chairs the Rosendale Environmental Commission and is one of the organizers on Citizens for Local Power, a grassroots group started in Rosendale that was formed in opposition to the merger and active in advocating for its rejection by the PSC. She said Monday she was happy with the decision: “We think it strongly supports our position that the proposed acquisition is bad for our communities and the CH service area,” said Metzger, noting that the judges “left the door a little open for the commission to make its own assessment.”
Seemingly in response to the decision and the judges stating that Central Hudson and Fortis “have made little as far as we can discern to forestall or defuse public opposition…” Central Hudson has unleashed a barrage of ads touting the deal and rebutting its critics on local TV, radio and newspapers.
“That says a lot — it says they’re taking the opposition seriously,” said Metzger. “What they’re interested in is getting their deal through.”
Schumer says his piece
In Kingston, Schumer warned that as currently pitched the merger would be a bad deal for Hudson Valley ratepayers, with “inadequate commitments,” he said, to keeping down rates and investing in infrastructure, renewable and clean energy. There were too many questions to let the deal go through at this time.
“We have not got adequate answers to these questions and until we do, we can’t be sure that this merger is good for the people of the Hudson Valley,” argued Schumer.
Schumer called for the PSC to set up an evidentiary hearing. “The purpose of the hearing would be to receive and permit cross-examination of all parties’ pre-filed testimony and exhibits. For the first time Fortis won’t be able to just say what it’s going to do, it will have to answer questions of people who are dubious of this deal.”
The judges’ decision rejected that option, stating that such a hearing “would serve no legitimate function because the controversies in the proceeding … present no factual questions that could be clarified by confrontation of witnesses and could materially affect the Commission’s decision.” He also called for the comment period to be extended 30 days “so those concerns are not swept under the rug.”
The senator said the one-year rate freeze offered by Central Hudson and Fortis wasn’t long enough. The freeze, Schumer said, would “actually allow Fortis to immediately begin the process of raising rates as it typically takes about a year for the PSC to approve rate hikes. The bottom line is the one-year rate freeze is a joke and they’ve gotta make it a lot better.”
On the rate freeze, the judges wrote: “Although potentially a benefit [to ratepayers] at the time it was offered, the rate freeze, at this point, is largely symbolic, given the unlikelihood that Central Hudson would, or could, file a new rate case within the next two months, as would be necessary to increase rates before July 1, 2014.”
Schumer further warned that the Fortis takeover would, as he said it has in the U.K.-based National Grid’s takeover of Niagara Mohawk and Spain-based Iberdrola’s takeover of New York State Electric and Gas Corporation and Rochester Gas & Electric Corporation, result in a huge debt load placed on local ratepayers’ shoulders. “We need a load of safeguards in place. None of those safeguards is in place — plain and simple,” said Schumer.
