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Fortis Inc. and CH Energy Group Close Transaction

NYS Public Service Commission Approves Merger
Central Hudson news release     |     Public Service Commission Order

Video: Public Service Commission Votes to Approve Merger

 

Support for the Central Hudson-Fortis Merger

» Business and Economic Development Leaders Favor Proposal 

» Letter of support from local nonprofit organizations 

» Why union groups support this merger

» Local businesses are in favor of the proposal

» Enhancements offer

» How customers will be primary beneficiaries

» Belizean official sets record straight on dam  

» Letter to customers from Central Hudson and Fortis  

 

More information about this proposal

» Settlement Agreement   

» Q&A   

» Before & After  

» About CH Energy Group   

» About Fortis

 

Fortis CFO Barry Perry
talks to you ...

Customer/Community Benefits

Commitment to Employees

Advantages of the Fortis Model

Environmental Commitments


Fortis companies
Learn more about how current members of the Fortis federation of utility companies operate and what they value.

Fortis Alberta -
Community

Fortis BC -
Energy Solutions

Fortis BC -
Customer Service

Fortis BC -
Natural Gas Vehicles

Fortis BC -
Employee Career

 



Facts about this Merger Proposal

Central Hudson will continue to be fully
regulated by the State of New York.

Any concerns to the contrary are completely unfounded. The North American Free Trade Agreement (NAFTA) does not undermine the New York State Public Service Commission's (PSC) authority over rates, services, environmental initiatives, system investments, energy policy or any other decisions the PSC makes as it exercises its responsibilities under the Public Service Law.

Under the merger, Central Hudson would continue to be headquartered in the Hudson Valley, and be regulated by the PSC and would support the energy policies of the State of New York.

Since NAFTA was enacted in 1994, four Canadian companies (Emera, Algonquin Power & Utilities, Gaz Metro, and Enbridge) have acquired distribution utilities in northeastern states, including Bangor Hydro, Maine Public Service, Granite State Electric, EnergyNorth, Vermont Gas Systems, Green Mountain Power, Central Vermont Public Service and St. Lawrence Gas in New York. There have been no jurisdictional issues in any of these cases. Also, one of the largest gas distribution utilities in Canada, Union Gas, is owned by a U.S.-based company, Spectra.


Central Hudson’s local people will retain control of day-to-day operations and decision-making

Very little change is expected. Fortis has expressed a strong desire to keep all of Central Hudson’s employees and to maintain existing wages and benefits.

The Canadian utility companies that are currently part of the Fortis federation each have an autonomous board and a management team that conducts all utility functions. Fortis, as the parent holding company, has a staff of less than 20 people and has no centralized services company. Fortis is committed to continuing with this practice. This federation model of organization provides the benefits of scale while also empowering decision-making by each utility that reflects local economic, regulatory and cultural concerns.

The biggest change? Instead of 30,000 CH Energy Group shareholders, there will be one shareholder, a well-respected utility with capital to invest to improve the valley’s electric and natural gas infrastructure.


Central Hudson employees will keep their jobs

All jobs will be retained, including those of the unionized members of the International Brotherhood of Electrical Workers, which together with the New York State chapter of the AFL-CIO and the New York State Utility Labor Council support the merger. Central Hudson will continue to hire from the local region, as it does today, to fill new positions or employment needs.


Central Hudson’s executives will receive the same benefits as any other shareholder

Executives will be reimbursed for the shares of CH Energy Group stock they already own, or are already owed, just as every shareholder will be reimbursed for their respective shares. Executives will receive no other additional benefits due to the merger. Fortis has committed that the existing management will remain in place. In the unlikely event of a termination, severance benefits may apply. No costs associated with the acquisition, including payouts to executives for their shares, will be borne by Central Hudson customers.


Central Hudson energy efficiency and solar programs and those that help protect the environment will continue as before

All of Central Hudson’s environmental initiatives will continue, including energy efficiency incentives and programs, as well as support for our successful net metering program for wind and solar power installations by customers. Central Hudson will continue to follow and support the energy policies of New York State, and energy supply resources for the Hudson Valley would remain the same as they are today, i.e. purchased through the New York wholesale energy market.

Under New York State regulation, Central Hudson may not own or construct new generating facilities, including those that use renewable energy; Central Hudson is a delivery-only utility since the deregulation of the industry in 2000. However, we will continue to own and operate three small hydroelectric generating stations in Ulster County, as permitted by New York State following deregulation.


Utilities are owned by companies outside of the United States with no negative consequences

Central Hudson will continue to be incorporated in the State of New York and will operate as a regulated utility. The current board of directors will transition to increase members from New York and the Hudson Valley region. Central Hudson will continue to pay local, state and federal taxes, and all operating decisions will continue to be made locally.

NAFTA does not undermine the authority of state regulators, and Central Hudson continues to be regulated by the State of New York and federal authorities.

The merger has received approval by federal regulatory agencies, including the Federal Energy Regulatory Commission; the Committee on Foreign Investment in the United States; the Federal Trade Commission Hart-Scott-Rodino Antitrust Improvement Act; and the Federal Communications Commission.


Energy supplies will continue as they are today

Energy supply resources for the Hudson Valley would remain the same as they are today, i.e. purchased by Central Hudson employees through New York State’s wholesale energy market.


Central Hudson will continue to invest
in the electric and gas system

Fortis will support Central Hudson’s investments in the local utility infrastructure, including those that provide added resilience against major storms. As a benefit, Fortis has greater access to capital that would enhance Central Hudson’s ability to make these investments, including those that support the Governor’s Energy Highway initiative that would, in part, facilitate transmission of renewable energy resources from upstate and western New York.

In addition to their investments in our infrastructure, Fortis utility employees are also available to assist us in storm emergencies, as they did during the restoration efforts following Superstorm Sandy. Fortis utilities operate in regions exposed to some of the most extreme weather conditions experienced anywhere in the world.


Customers are protected from the
costs of this merger

All costs of the merger will be paid for by shareholders and Fortis, and not by customers. Consistent with the process used since 1926, the Public Service Commission will continue to review and approve delivery rates for Central Hudson. Rates will be based on the cost of providing service, and any merger related costs will be excluded.


The one-year rate freeze provides value to customers

As part of the proposal to merge with Fortis, the agreement between Central Hudson and the parties includes a one-year rate freeze. In order to uphold this pledge, Central Hudson did not file a rate plan last year that would have succeeded the current rate plan that expires in July of this year. The 11-month process ensures that current delivery rates will remain frozen until July 2014, and as a provision of this rate freeze Central Hudson will be required to continue investing Shareholder Funds in the electric and gas system, and to provide all customer services.


This process has been ongoing since
February of 2012

The announcement of this merger on Feb. 20, 2012 was front page news, and each step along the way has been well publicized. This merger proposal followed an exhaustive expert review, and involved local interests and federal and state agencies; and after a full year of deliberation, in January 2013, Central Hudson, Fortis, the staff of the New York State Department of Public Service, the Utility Intervention Unit of the New York State Department of State (representing all residential customers, including low-income residents), Multiple Intervenors (representing large industrial customers) and Orange, Ulster and Dutchess counties agreed on specific benefits and terms of the merger.

The Joint Proposal offers protections for Central Hudson and our customers, plus Fortis will provide nearly $50 million in benefits that would otherwise not be available without the merger, including $35 million that will provide future rate mitigation by paying for previously incurred storms (Hurricane Irene, the October 2011 snowstorm and Hurricane Sandy) and other expenses.


Central Hudson and our customers will receive financial protections

Because it is a conservatively managed, well regarded utility, Fortis is one of the highest-rated utility holding companies in North America, with debt ratings in the A category. The proposed terms provide financial protections for Central Hudson and its customers in the unlikely event that Fortis may experience financial problems. Also, financial statements for both Fortis and Central Hudson will be provided to the PSC, and an annual, independent review of Central Hudson’s financial statements will continue to be conducted.


Fortis has an excellent environmental record

Fortis utilities, like Central Hudson, offer energy efficiency programs for their customers and support the use of renewable energy through net metering programs and through the development and operation of hydroelectric generation. Some Fortis utilities hold energy efficiency fairs and contests to help communities reduce their energy use, save money and protect the environment. Fortis utilities are also helping their customers reduce their environmental footprint through such initiatives as the use of district heating utilizing geothermal exchange, the development of renewable natural gas from landfill sites, and the promotion and development of natural gas transportation for heavy truck fleets.

Fortis utilities do not produce natural gas; they distribute to their customers, just like Central Hudson.


Health and retirement benefits for
employees and retirees are unchanged

The merger does not change health and retirement benefits for Central Hudson’s employees and retirees. Pension benefits are protected under law, and Central Hudson continuously evaluates other benefits offered to active employees and retirees based on business conditions.