Dive Brief:

• UIL Holdings and Iberdrola SA announced an agreement with the Connectiucut Attorney General this week to clean up the contaminated English Station coal power plant complex in New Haven, the Hartford Courant reports. 
• The deal gives the two utilities, which have a separate merger proposal before state regulators, three years and $30 million to clean up PCB and other contaminants on a 9-acre man-made island in Mill River. The deal is separate from the companies' contentious merger proposal.
• The cleanup agreement hinges on approval for the companies' merger application from Connecticut's Public Utilities Regulatory Authority (PURA), but regulators say it won't impact their deliberations on the merger. Attorney General George Jepsen, however, had made the cleanup of English Station a condition to earn his support for the merger.

Dive Insight:

UIL Holdings and Spanish holding company Iberdrola SA have faced hefty hurdles for its proposed $3 billion merger. The merger announcement in March also kicked up controversy in the New Haven community over UIL Holding's PCB-contaminated English Power Plant, which the company sold in 2000 to private buyers. 

Now the merger partners have signed an agreement with the state's Attorney General to clean up the plant that comes with a $30 million pricetag. The agreement will cut down on years of potential litigation, officials said. When UIL's parent company, United Illuminating, sold the plant, it told the new owners the cost of remediation would be roughly $8 million. But secret filings obtained by the Courant put the remediation costs at $21 million. Since UI owned the plant, it's responsible for cleaning up the contamination costs, state officials ruled. 

Although the cleanup agreement must be approved by state regulators, the Courant reports it won't play into the decisionmaking process for the merger, which regulators rejected in a preliminary decision in June. 

In March, Iberdrola sought approval for its acquisition of UIL Holdings Corp., but PURA rejected it on the grounds of uncertainty over how the company would run the company. In August, Iberdrola withdrew its application after PURA indicated it would reject the merger entirely.

At issue were questions over Iberdrola's ability to supply electricity reliably alongside concerns over customer prices.  

In a separate case, Iberdrola and the state's consumer watchdog agency for utilities, the Office of Consumer Counsel, have hashed out a tentative agreement for the merger and expect to file it with utlity regulators in the next few days.