Dive Brief:

• Connecticut's top law enforcement official wants the proposed merger of Iberdrola USA and UIL Holdings to be contingent on the companies committing to cleaning up a coal facility nearly 100 years old, but utility regulators do not appear to be on board with the idea.
• Attorney General George Jepsen wants the companies to place $30 million in an escrow fund to clean up the English power plant, which UIL shut down in the early 1990s and subsequently sold. He wrote to regulators that the site still contains harmful contaminants.
• The companies filed a reply brief pointing out that the Public Utilities Regulatory Authority (PURA) has already determined the merger proceeding is not the “appropriate venue” to discuss cleanup costs and there is no authority to impose such a restriction.

Dive Insight:

United Illuminating, owned by UIL, sold the English generating station 15 years ago but some state officials maintain the company still bears responsibility for its cleanup. In a brief filed earlier this month, Connecticut AG Jepsen wanted the companies to commit $30 million to cleaning up the site – with the potential for that figure to rise.

Jepsen urged PURA to reconsider its decision to leave the English plant out of the merger considerations, arguing in a brief that UI “operated a power plant at the site for decades and bears a significant portion of responsibility for the very serious environmental contamination (predominantly highly toxic PCBs) that remains at the site.”

Jepsen said said regulators' decision in 2000 to allow the sale of the facility “specifically contemplated that UI could have continuing environmental responsibilities at the site.”

But according to the companies, PURA has already determined the English plant is not an appropriate considering in the merger.

“Given that the Authority has decided that these issues are beyond the scope of this proceeding, the record is devoid of any evidence upon which the Authority could base a condition such as that recommended by the AG,” the companies replied.

FERC approved the merger earlier this month, paving the way to create one of the largest utilities in the United State with 6.7 GW of installed capacity. The deal, announced in February, will be completed with an exchange of Iberdrola USA shares for UIL stock, along with cash payments to UIL shareholders of $597 million. Connecticut and Massachusetts regulators must first approve the acquisition, expected by the companies to close before the end of the year.