National Grid, Keyspan Reach Merger Agreement With NY Department Of Public Service
Westborough, MA and Brooklyn, NY — National Grid and KeySpan Corp. recently announced they have reached agreement with the staff of the New York State Department of Public Service and other parties on National Grid's acquisition of KeySpan.
"This agreement is a major step forward in completing the merger and bringing significant benefits of the combined companies to our customers and other stakeholders throughout New York," said Steve Holliday, Chief Executive of National Grid.
The National Grid-KeySpan merger will provide more than $600 million in savings to gas customers in New York City and Long Island over the next five years, compared with where delivery rates would have been without the merger. The agreement focuses primarily on the delivery rate portion of a customer's bill. The cost of the gas itself will fluctuate with market prices.
For KeySpan customers in New York City, the proposal calls for a freeze on base gas delivery rates through 2012, representing 19 years without an increase. The last increase occurred in 1993. On Long Island, the agreement calls for a one-time increase of $60 million in gas revenues to cover greater increases in property taxes and medical costs for employees. Base delivery rates on Long Island have not gone up since 1996. The one-time increase freezes rates to 2012, representing a single increase in 16 years.
Robert B. Catell, Chairman and Chief Executive Officer of KeySpan, praised the agreement for holding down the cost of energy delivery for KeySpan customers through 2012.
"The savings that come from merging with National Grid, which are captured in this settlement, provide rate stability for the future," Catell said. "Without the merger settlement, KeySpan customers were facing significant rate increases due to rising costs."
In addition, the agreement presents National Grid with the option to enter into a long-term, fixed-price contract for all output from the 2,450-megawatt Ravenswood Generating Station in Queens, N.Y. National Grid will have up to three years to complete that option or divest the station.
In addition to the staff of the New York Department of Public Service and the companies, other parties participating in the agreement are New York State Consumer Protection Board, City of New York, Public Utility Law Project, and the International Brotherhood of Electrical Workers Locals 1049, 1381 and 97.
The settlement is subject to review by the administrative law judges overseeing the merger case and the review and approval of the New York State Public Service Commission.
The current schedule for the regulatory process calls for the proposal to be considered at the August 22 New York Public Service Commission meeting.
Approval by the New York Public Service Commission is one of the last remaining reviews required in the merger, which was announced on Feb. 27, 2006. Approval of a settlement with the staff of the New Hampshire Public Utilities Commission and other New Hampshire parties is pending. All other major approvals and clearances for the merger have been received.
About National Grid
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 distributes electricity to approximately 3.4 million customers in Massachusetts, New Hampshire, New York and Rhode Island and natural gas to approximately 569,000 customers in New York and 245,000 customers in Rhode Island.
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 customers in homes and businesses in Britain. In addition, it has a number of businesses operating in related areas such as LNG importation, land remediation, metering and interconnectors.
About KeySpan
A member of the Standard & Poor's 500 Index, KeySpan Corporation is the largest distributor of natural gas in the Northeast United States, operating regulated gas utilities in New York, Massachusetts and New Hampshire, serving 2.6 million customers. These customer-focused businesses are complemented by a portfolio of service companies which offer energy-related products, services and solutions to homes and businesses. KeySpan is also the largest electric generator in New York State. The Company owns approximately 6,650 megawatts of generating capacity, providing power to 1.1 million customers of the Long Island Power Authority on Long Island and supplying approximately 25 percent of New York City's capacity needs. In addition to these assets, KeySpan has strategic investments in pipeline transportation, distribution and storage. KeySpan has headquarters in Brooklyn, New England and Long Island.
SOURCE: National Grid