Pledge by Central Hudson suitor for community programs a ‘pittance,’ NY Assemblyman Kevin Cahill says (with letter)
State Assemblyman Kevin Cahill contends an offer by Fortis Inc. of Canada to contribute $10 million to community projects under its plan to buy Poughkeepsie-based CH Energy Group raises concerns about the financial stability of the combined company.
In an April 26 letter, Cahill, D-Kingston, asked state Public Service Commission Chairman Garry Brown to consider amounts provided in other takeovers.
“The customer benefit proposal submitted by Central Hudson is, frankly, a pittance when compared to what was required of Iberdrola when the commission approved its acquisition of Energy East in 2009,” wrote Cahill, who chairs the Assembly Energy Committee.
“In that order, the $275 million ratepayer assistance fund amounted to $220 per electric customer in the areas served by New York State Electric & Gas and Rochester Gas & Electric,” he wrote. “In contrast, the $10 million fund proposed by Central Hudson would amount to a mere $33 per electric customer. While this small amount may benefit the respective companies’ shareholders, it does not do nearly enough to serve the public interest.”
Fortis announced plans in February to buy CH Energy Group, the parent company of Central Hudson Gas & Electric Corp., for $1.5 billion and assume $500 million in CH Energy debt.
The companies later announced the deal would in-clude $10 million for community benefit programs and another $10 million for projects to reduce customer costs.
CH Energy spokesman John Maserjian said the Iberdrola takeover cited by Cahill was complicated than Fortis’ proposal.
“I think the Public Service Commission is going to look at this transaction as it stands,” he said. “It might be improper to scale the benefits of one transaction vs. another without looking at the entire picture and the entire package. We feel that $20 million is a serious commitment.”
News Release Cahill Weighs in With PSC on Central Hudson Filing
Cahill also contends the proposed sale comes at time when funding for public advocacy has been cut. He noted during a public hearing in February that the state Department of State acknowledged customers had lost the ability to be fairly represented during disputes with utilities. Continued...
“The impact of the precipitous decline in state advocacy funding has only been compounded by the loss of strong independent voices like the Citizens Utility Board and invaluable Public Utility Law Project, leaving New York’s consumers voiceless, powerless and without representation in important proceedings before the commission,” Cahill said.
Maserjian responded that the state Public Service Commission still will take customer concerns seriously.
“Advocacy groups can still ... be party to the case,” he said. “There are still opportunities for groups to do that. It still exists and always has.”
Cahill said the Public Service Commission also should review the amount of money that CH Energy Chairman Steven Lant will get from Fortis if the deal is approved.
“In view of the primary fiduciary obligation owed their shareholders, highlighted by the more than $2 million windfall the CH Energy chairman is in line to receive, reliance solely on the beneficence of Central Hudson would be misplaced,” he wrote.
Lant was paid a base salary of $575,000 in 2011 and owns 37,389 shares of the company’s common stock, according to CH Energy’s most recent quarterly report. That stock portfolio would be worth $2.43 million under Fortis’ plan to pay $65 per share.
Lant also is reported to have a retirement benefit package worth $6.13 million at the end of 2011.
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