Iberdrola selling 3 natural gas utilities; proceeds to finance Maine power grid improvements

Iberdrola deal to finance Maine power grid upgrade

PORTLAND, Maine — The parent company of Central Maine Power is selling three natural gas utilities in New England to help pay for a $1.4 billion power grid upgrade in Maine that’s aimed at assuring reliability and creating capacity for future wind power projects in the state.

Utility company UIL Holdings said Tuesday that it will buy Southern Connecticut Gas Co., Connecticut Natural Gas Corp. and the Berkshire Gas Co. from Iberdrola USA for $885 million. Under the deal, UIL Holdings also will take on about $411 million in debt, as well.

Iberdrola USA, subsidiary of the Spanish utility Iberdrola, said the deal will help fund Central Maine Power’s first major grid upgrade in three decades.

“The investment will serve to continue guaranteeing electricity network reliability for customers in Maine and the New England region, providing it with the necessary capacity to incorporate new renewable energy sources,” said Michael McClain, who’s overseeing the project for Iberdrola.

CMP plans to double the capacity of the grid’s backbone in Maine with a new 345,000-volt transmission line from Orrington to Eliot, near the New Hampshire border. All told, the Maine improvements include 500 miles of new and upgraded high-voltage lines, as well as five new 345,000-volt substations.

Iberdrola will pay for the improvements, about half with cash, and half through borrowing. The money will be recouped from New England electric ratepayers.

Besides ensuring reliability, the improvements provide a conduit for wind farms to get electricity to power-hungry southern New England. One spur takes a high-voltage line to Rumford, bringing the grid closer to proposed wind farms in western Maine, said John Carroll, a CMP spokesman in Augusta.

A companion project would have connected northern Maine to the regional power grid for the first time, but that $625 million project was put on ice. For the time being, Maine Public Service customers in Aroostook County remain connected to the power grid in New Brunswick.

Iberdrola said the decision to sell the three natural gas utilities to UIL Holdings, parent of Connecticut’s United Illuminating Co., falls within its plan of selling non-strategic assets.

The three utilities have 369,000 customers in Connecticut and Massachusetts. They have a combined work force of approximately 800. UIL intends to issue debt and equity to fund the cash portion of the purchase price; the deal is expected to close by early next year.

As for the power grid improvements in Maine, the Maine Public Utilities Commission gave its approval this month, and a final order is due by the end of June. CMP also hopes to get final permits from the Army Corps of Engineers and start construction in June.

The negotiated plan includes a pilot program for “smart grid” and non-transmission alternatives and $17 million for energy efficiency programs, among other things. CMP said the project will create about 2,100 new jobs and provide $61 million in wages for each year of construction, scheduled to end in 2015.

CMP is Maine’s largest utility, with 600,000 customers in the state. ISO New England, the regional power grid, serves 7 million homes and businesses in New England.

Online:

Central Maine Power: www.cmpco.com/

UIL Holdings : www.uil.com/

Iberdrola: tinyurl.com/nqj6zd