Lawmaker skeptical Emera Maine's proposed $1.3B sale will benefit ratepayers
Courtesy / Office of Rep. Seth Berry
State Rep. Seth Berry, D-Bowdoinham, said the Maine Public Utilities Commission should focus closely on the question of whether the proposed $1.3 billion acquisition of Emera Maine by Calgary-based ENMAX Corp. will truly benefit the utility's 159,000 customers. Berry is the House chairman of the Energy, Utilities and Technology Committee.
State Rep. Seth Berry, D-Bowdoinham, who is the House chairman of the Energy, Utilities and Technology Committee, told Mainebiz in a telephone interview on Monday that he has strong misgivings about the $1.3 billion proposed acquisition of Emera Maine by the western Canadian firm ENMAX Corp.
"This is a deal that has huge implications for Maine," he said. "I am deeply concerned about the increasingly distant ownership and control of our electric utilities. The basic question is: Who controls Maine power? My feeling is that it's time to stop allowing more and more distant control of Maine's power and that this proposed acquisition needs to be vetted thoroughly by the Maine Public Utilities Commission as to whether it's going to be in the best interest of Emera Maine's customers."
As announced Monday, Halifax-based Emera Inc. said it has agreed to sell its interest in Emera Maine to ENMAX Corp. for $1.3 billion in U.S. currency, a purchase price that includes $959 million in shares and approximately $341 million in assumed debt. The proposed sale is subject to certain conditions, including regulatory approvals, and is anticipated to close in late 2019.
With 159,000 customers and a 10,400-square-mile service area, Emera Maine is Maine’s second-largest transmission-and-distribution electric utility — after Central Maine Power, with 600,000 electricity customers in an 11,000 square-mile service area in central and southern Maine.
Both companies were acquired by foreign interests in the last two decades. Emera Inc. purchased Bangor Hydro in 2001, which was followed by the 2010 acquisition of Maine Public Service Co., and the merger that resulted in Emera Maine. CMP was purchased in 2008 by the U.S. subsidiary of the Spanish multinational energy company Iberdrola. In 2015 Iberdrola USA merged with UIL Holdings to become Iberdrola-controlled Avangrid.
“The trend toward more distant ownership has not been helpful to the customers of Emera Maine and CMP,” Berry said, citing data compiled by the federal Energy Information Administration showing Maine electricity customers in 2017 experienced, on average, more than three service interruptions — the highest rate in the country and more than double the national average. Mainers also were without power longer than anywhere else — on average more than 40 hours, according to the 2017 data.
Finally, Berry said he was troubled by the acknowledgment by ENMAX in its joint news release with Emera Inc. that its acquisition of Emera Maine would be funded 100% through debt.
ENMAX CEO offers assurances
Bangor Daily News reported that representatives of both Emera and ENMAX offered assurances at a news conference Monday that they do not expect the sale to affect electric rates in Maine or the number of people working for Emera Maine.
“I’d like to just reiterate that we are committed to the customers and the community here in Maine,” ENMAX President and CEO Gianna Manes said, according to the BDN. “The sale price sits outside the rates that are set for Emera Maine, [which] will continue to be set by the [Public] Utilities Commission of Maine, and our expectation is that none of the activities that we’re talking about today in terms of ownership change will have any effect on customer rates whatsoever.”
ENMAX’s hometown newspaper, the Calgary Herald, reported Monday that Emera Maine would be the company’s first acquisition outside of Canada and reflects a strategy of targeted growth “through regulated utility investments.”
On March 15, ENMAX announced its financial results for the year ended Dec. 31, 2018, reporting that its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $435.0 million, compared to $424.0 million in 2017, and comparable net earnings were $149.2 million versus $140.2 million in 2017.
“In 2018, we delivered positive financial results, closing the year with a strong balance sheet and remaining well positioned to continue to grow and create value for our shareholder, the City of Calgary,” Manes said in a statement accompanying the year-end financial report. “We also achieved strong operational performance throughout the year, ensuring the safety and reliability of our electricity system and services.”
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