8-KOther Events

EVERSOURCE ENERGY 8-K Report, Corporate Update (Mar 11, 2011)

Filed March 11, 2011For Securities:ES

Summary

Eversource Energy (formerly Northeast Utilities) filed an 8-K on March 11, 2011, to report on a significant development concerning its proposed merger with NSTAR. The Massachusetts Department of Public Utilities (DPU) issued an interlocutory order that alters the standard of review for mergers involving Massachusetts utilities. Previously, the standard was "no net harm" to the public interest; however, the DPU has now shifted this to a "net benefits" standard, requiring companies to demonstrate that the proposed merger's benefits clearly outweigh its costs. This change in regulatory review standard could impact the timeline and certainty of the NSTAR merger completion. While Northeast Utilities expressed satisfaction with the DPU's promptness and confidence in meeting the new "net benefits" requirement, the DPU will establish a new procedural schedule for evaluating the merger. The ultimate timing for regulatory approval, and thus the completion of the merger, remains dependent on this forthcoming schedule, although the company still anticipates closing the transaction in the second half of 2011.

Key Highlights

  • 1Massachusetts DPU changed the merger review standard from 'no net harm' to 'net benefits' for utility mergers.
  • 2The new standard requires demonstrating that merger benefits outweigh costs.
  • 3This applies to the proposed merger between Northeast Utilities and NSTAR.
  • 4The DPU will establish a new procedural schedule for the merger review.
  • 5The timing of regulatory approval and merger completion is now dependent on the new schedule.
  • 6Northeast Utilities expressed confidence in meeting the 'net benefits' standard.
  • 7The company still expects the merger to be completed in the second half of 2011.

Frequently Asked Questions

The main impact is that the DPU has raised the bar for approving the merger. Instead of proving 'no net harm' to the public interest, Northeast Utilities and NSTAR must now demonstrate that the merger provides 'net benefits,' meaning the advantages clearly outweigh any disadvantages.

It could. The DPU will set a new procedural schedule to review the merger under the 'net benefits' standard. While Northeast Utilities is confident, the actual completion date, still targeted for the second half of 2011, is now contingent on the DPU's revised timeline.

In this context, 'net benefits' means that the companies must present a case showing that the positive outcomes and advantages resulting from the merger for Massachusetts utilities and their customers are greater than any potential negative impacts or costs.

Investors can refer to Northeast Utilities' Form S-4 Registration Statement (Registration No. 333-170754) and their Annual Report on Form 10-K for the year ended December 31, 2010, filed on February 25, 2011, for more details on the proposed merger.