Northeast to buy NStar

Northeast Utilities, a Connecticut-based energy supplier, announced that it will purchase Boston-based NStar for $4.3 billion in stock. The merger will form a company with 3.5 million electric and gas customers in Massachusetts, Connecticut, and southern New Hampshire. SMG finance lecturer and an energy risk-management expert Mark Williams comments on the deal.

“Northeast Utlilities announcement to buy NStar for a whopping $4.3 billion is a further sign of consolidation that is happening in the U.S. utility industry. A main driver for this merger is reduction of overlapping cost structures. Providing energy services is increasingly a commodity business yet the twist is that utilities have monopolistic power. This power, and the ability to set price, is only countered by strong state public utility commissions. Its role is to make sure consumers receive dependable power at a fair price.

“The announced merger of Northeast and NStar could provide consumers with cost savings, but it will depend on the strength and ability of public utility commissions to advocate for rate paying consumers.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

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