Status Report: Puget Energy - Macquarie Infrastructure Partners

The anticipated political/public opposition of the Puget Energy (PSD) - Macquarie Infrastructure Partners merger has surfaced in the form of a rejection recommendation for the Washington State AG's office.

This is, of course, a fairly common occurrence in recent utility mergers and should in no way be considered a surprising development in this case. This deal is, to say the least, a very high-profile event in Washington state and the AG's office would be remiss if it did not take advantage of the growing negativity to the deal, regardless of motives. The AG's Public Counsel testimony is available by following this link.

Perhaps of greater importance, the Washington UTC staff is also recommending rejection of the merger to the voting Commissioners. This is a severe blow to the companies' hopes of obtaining the critical UTC consent as an extremely high percentage of deals failing to obtain staff approval also fail to obtain the respective state Commission approval.

The companies now have until July 2, 2008 to generate responses to staff, Public Counsel, and third-party testimony. Although it is too early to suggest that the companies' efforts are now acts of futility, the tenor of the review certainly suggests that the futility point is not far off. This will take an enormous amount of public relations and legal maneuvering efforts in order to sway the staff into altering its current position, and that can be said for the AG's office and intervenors as well.

Given the direction this transaction has now taken, it is difficult to anticipate the current procedural schedule continuing on a September 2 decision course. If the companies are able to successfully navigate through the enormous opposition, the negotiations process could easily push the deal well into the fall or winter of this year. It is just as likely that the companies will decide to terminate the transaction within the next two to three months if the July (again, these may be pushed back) settlement conferences and evidentiary hearings fail to yield positive results.

 

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Comments

[windfan]

Puget has embraced wind and solar power as per new WA state power requirements for public utility companies. This is of course a very expensive undertaking and one that requires capital to complete. In this era of surging oil and higher natural gas prices, does it make any sense at all, to not take on what Puget has recognized as the solar and wind power future for the utility? These are the kind of recommendations and the type of thinking (it doesn't pencil out, sorry the answer is no) that have kept Detroit from investing in more fuel efficient vehicles and contributes to putting the US in the economic situation we are currently in. I say, let Puget follow up on their plans and if it doesn't pencil out, let some other utility like Bonneville or Tacoma or Seattle purchase the utility for pennies on the dollar. It should be the market economy that judges the sucess of this, not the WUTC. It is unfortunate that WUTC hacks do not grasp the big picture here. Someone should check their stock portfolios to see if they hold big oil.