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New England Electric insists customers pay $110 million fee
The battle lines have been drawn in the proposed of the state's three major electric utility companies.
New England Electric System of Westborough, Mass., the parent company of Narragansett Electric Co., is retreating from some of the changes in electric rates it has proposed as part of its pending $634 million merger. with Boston-based Eastern Utilities Associates, which owns Blackstone Valley Electric Co. and Newport Electric Corp.
But New England Electric is drawing a line in the sand over its controversial request to the state Public Utilities. Commission that customers here kick in roughly $110 million to pay for the portion of the merger involving Rhode Island.
New England Electric is paying $260 million more for Eastern Utilities than the latter company, is worth on paper. New England Electric figures Rhode Island's share of the difference, called an acquisition premium, comes to $93 million including the impact of taxes. Customers here would also have to chip in $16.5 million for merger expenses such as investment banking fees. Massachusetts customers are being asked to pick up part of the tab as well.
Shareholders v Rate Payers
The company argue that the merger would produce savings for customers that exceed the acquisition premium and transaction costs, but attorneys and consultants representing industrial firms, regulators and the state attorney general say New England Electric's shareholders should get the bill for the merger …