National Grid USA (National Grid) announced its proposed acquisition of Keyspan, the largest distributor of natural gas in the Northeast and New York state's largest electricity generator. At the completion of the merger, National Grid will have a combined 3.4 million natural gas customers and 8 million electric consumers in the New York and New England area. Keyspan will continue to operate in its own name, although it will be a wholly owned subsidiary of National Grid. The companies have targeted to close the transaction by early 2007.
This announcement comes on the heels of Exelon's purchase of PSEG, Mid-American's purchase of PacifiCorp, Duke Energy's planned acquisition of Cinergy, and the merger of Florida-based FPL Group with Constellation Energy "• all made feasible by last year's repeal of the Public Utility Holding Company Act of 1935 (PUHCA). (See Energy Policy Act of 2005 Hands FERC a Long To-Do List, FERC Pares Back Accounting & Record Keeping, but Retains Strict Transfer Pricing for Public Utility Holding Companies under PUHCA 2005 and Congress Enacts Energy Bill) Some legislators, such as Rep. Edward Markey, have begun to question whether these consolidations will benefit utility ratepayers, and have expressed concern that FERC may not properly scrutinize utility mergers and acquisitions, even though FERC was given authority to do so in connection with PUHCA's repeal. Rep. Markey has called on the states to strengthen state laws concerning such mergers because due to the repeal of PUHCA, the Securities and Exchange Commission no longer has the authority to review debt financing associated with such transactions.