Tuesday, April 24, 2012
By WILLIAM J. KEMBLE
POUGHKEEPSIE, N.Y. — The head of the parent company of Central Hudson Gas & Electric Corp. says a buyout by the Canadian firm Fortis Inc. will mean a rate freeze until mid-2014 and $20 million in benefits for customers and the community.
The announcement came in a news release by CH Energy Group President and Chief Executive Officer Steven Lant regarding the utility’s filing with the state Public Service Commission for approval for the takeover.
A CH Energy Group shareholders’ meeting is scheduled for 10:30 a.m. today at its corporate headquarters at 284 South Ave.
“If approved, the merger transaction would provide a rate freeze until July 2014 and could moderate future rate filings,” Lant said in the release. “Fortis has pledged to provide a community benefit fund of $5 million devoted to broader community interests, such as economic development, energy efficiency and low-income programs, and an additional $5 million to absorb costs that would normally be recovered from customers.”
The release said the takeover will also “position Central Hudson to avoid certain operating costs it now incurs, totaling an estimated $10 million over the first five years after closing of the merger transaction.”
Fortis Inc. in February announced plans to purchase CH Energy Group in a $1.5 billion deal that calls for the purchase of CH Energy Group stock at $65 per share and would have Fortis assume $500 million in debt.
CH Energy Group reports having 300,000 electric customers and 75,000 natural gas customer in eight counties, including Ulster, Dutchess, Greene and Columbia. Fortis, which is based in Newfoundland, reports having about 2 million gas customers in five Canadian provinces, two Caribbean countries, and upstate New York.
In the news release, CH Energy noted that additional filings will be needed with the Federal Energy Regulatory Commission, Securities and Exchange Commission, the U.S. Department of Justice, and the Federal Trade Commission.
Fortis President Stan Marshall said Central Hudson will retain “substantial autonomy” if the takeover is approved.
“Fortis has committed to retaining all of Central Hudson’s employees and continuing their long tradition of supporting community agencies and providing leadership in local economic development efforts,” he said.
CH Energy Group, in its quarterly filing to be reviewed during the shareholders’ meeting, reported that Lant, who will be seeking reappointment as CH Energy Group board chairman, had a base salary of $575,000 in 2011 as part of $2.4 million in total compensation, including stock. His retirement benefits are reported to have accumulated to $6.13 million.
The state Public Service Commission filing was met with cautious optimism on Monday by U.S. Sen. Charles Schumer, D-N.Y., in an email. Schumer in February had expressed concern that rates and the quality of service would be affected by the takeover.
“I’m cautiously optimistic that this filing is good for the family budgets of ratepayers throughout the Hudson Valley, and for the twelve hundred workers Central Hudson employs,” he said. “I’ve asked the PSC to put ratepaying families front and center when reviewing this potential merger and am encouraged by the first filing. If this merger is approved, I’m going to push Fortis to live up to their promises to keep rates affordable while providing quality service to all of their customers.”