Puget Sound Energy merger with foreign investor group

[Jan Kobak]

There is a proposed merger request of Puget Energy and Puget Sound Energy with a group of US and foreign investors. Public comments are being asked for by the Washington Utilities and Transportation Commission. They have the final say in whether this happens or not. Personally, I do not think our utility ought to be out-sourced. Service and response times can be iffy at times already without having to deal with an investment firm.Please send in a response.
For written response:UTC,P>O>Box 47250, Olympia,Wa.98504-7250
via phone: 1-800-562-6150
via email: Comments@utc.wa.gov

[Webmaster]

Thanks for the post! Where did you hear about this? Is there an information source so we can learn more?

[Jan Kobak]

The info came with an insert included in the latest power bill. When you submit a comment to utc they will send you additional info about the merger.

[Webmaster]

Interesting editorial on the topic:

Uneasy lies the head of Puget Sound Energy

The Times shares the public's uneasiness over the sale of Puget Sound Energy to an Australian investment bank and Canadian pension funds.

Puget Energy is the largest private utility in Washington. Its managers and directors are here, and they are where the buck stops. After the acquisition, the buck will stop in Australia.The citizens and ratepayers who spoke at the Utilities and Transportation Commission's hearing in Bellevue Thursday sensed this issue, though some of their specific worries may have missed the mark.

Even if all its shares are owned by foreigners, Puget will remain a separate company with books open to state regulators. Puget will have to follow the same laws to build a power plant, to raise rates, and so on.

Ratepayers will still be charged for the cost of works necessary to serve them, and should not have their rates raised one penny to meet the financial obligations of Australian or Canadian stock buyers.

There was a thought at the hearing that Puget is a community asset, like the body of water for which it is named. "This is privatization!" one man said. Legally it is not. Puget already belongs to private shareholders. This is a proposal to exchange one set of shareholders — mostly Americans investing for their retirement — for another, including funds that pay for the retirement of Canadians.

But the citizens were not entirely wrong. Something real is being lost; they could feel it. Julie Avila of Finn Hill touched a part of it when she recalled that during the storm of 2006, when she was out of electric power for 10 says, someone from Puget called every day to check on her family.

"If a company were owned by investors in Canada and Australia, I don't think we would be getting those calls," she said.

Whether she is right about the calls to her house, no one can know. But common sense and experience tell us that it matters where the company's ultimate boss lives. If a storm knocks out the power of 100,000 people, it matters whether the CEO is in that storm, and whether the directors are in it. Economic theory might say it shouldn't matter, because financial incentives remain the same, but it does matter.

The UTC should take a hard look at this proposal, and the behavior and character of the acquirer, the Macquarie Group of Australia. The regulators should keep in mind whom they work for, and who will benefit from their decision.

from: http://seattletimes.nwsource.com/html/editorialsopinion/2004419914_pseed18.html

[Webmaster]

By Ángel González
Seattle Times business reporter

Critics of a takeover of Puget Energy by a group of Australian and Canadian investors reached a proposed settlement with the utility and the potential buyers that resolves all their issues with the $7.8 billion merger, the company said in a news release Monday.

The statement from the holding company for Puget Sound Energy, the state's largest utility, said details of the agreement will be filed Tuesday or Wednesday with the Washington Utilities and Transportation Commission, which has the final word on the deal.

The commission's staff, which had strongly opposed the deal because it would increase the utility's debt burden, has agreed to the settlement. So have the Industrial Customers of Northwest Utilities, which represents companies such as Boeing and Microsoft; the Energy Project, which represents low-income ratepayers, and other parties.

The parties will ask the commission to change the current schedule for the approval process, which currently includes evidentiary hearings starting on July 28.

The parties intend to request a prehearing conference as soon as possible, a Puget Energy statement said.

from: http://seattletimes.nwsource.com/html/businesstechnology/2008064874_webpse21.html

[Webmaster]

Seattle Times Editorial

IN a few weeks, three appointed state commissioners will make a decision profoundly affecting the Puget Sound region and its residents, corporations and future. The decision is who — or what — will own the company that distributes much of the region's gas and electricity.

The company is Puget Sound Energy, based in Bellevue. It is now owned by public stockholders. The three utility commissioners — Mark Sidran, Patrick Oshie and Philip Jones — are now judging a proposal from the Macquarie Group Ltd., a merchant bank in Australia, to buy out Puget's shareholders and replace them with a handful of Australian and Canadian investors.

State law makes Sidran, Oshie and Jones the guardians of the public interest in this matter. It grants them full authority to say yes or no.

We have said before they should say no, and we say so again. A leveraged buyout of Puget is not in the public interest. We can't see that it's in anyone's interest — that is, anyone around here — except a handful of senior executives who get large payouts if they are let go; CEO Steve Reynolds, who will get $9.6 million even though he stays; and shareholders, including Reynolds and the others, who will be paid $30 a share for a stock previously trading under $24. Some shareholders live around here, though most of Puget's shares are held by institutions.

Puget's 1 million power customers and 735,000 gas customers are all around here. They will continue to pay bills to PSE. After the takeover, there will be four shell companies over PSE, each holding shares in the one below it, with the acquisition debt loaded on one of the companies above PSE.

The separation is called "ring fencing." It aims to make the people at the bottom look safe. Their gas and electric rates will remain regulated by the state — indeed, by the very same Sidran, Oshie and Jones. The new debt is not supposed to be the ratepayers' worry, except for one thing: They are the ultimate source of payment.

Puget's directors argue that foreign ownership will be good for customers because the new owners are more eager to invest money in Puget than Americans are. We think Puget has been doing all right with American investors. Less than a year ago, Wall Street bought a block of new Puget shares at $23.67 a share, a price that was supported by Puget's solid, tax-favored dividend.

But Macquarie offers $30. Why, if Puget is such an ugly duck, do the Australians offer a 20-percent premium for it? Macquarie's man at the hearing in Olympia, Christopher Leslie, answered: because Macquarie wants control. The Australian merchant bank, he said, is "not interested in small minority positions in institutions where we have no influence."

For influence over a power company whose customers are all here, an Australian merchant bank is willing to pay a premium of $6 a share for 130 million shares. Do the math: It's a heck of a premium.

This deal is in somebody's interest, big-time. We ask again, publicly, whether Sidran, Oshie and Jones truly believe it is in the interest of people around here.

from: http://seattletimes.nwsource.com/html/editorialsopinion/2008170013_pugeted10.html

[Webmaster]

Please send in a response.
For written response:UTC,P>O>Box 47250, Olympia,Wa.98504-7250
via phone: 1-800-562-6150
via email: Comments@utc.wa.gov
(copied from first post in this thread)

[Webmaster]

By Seattle Times business staff

Puget Energy, the state's largest utility company, said Friday it has completed its sale to a consortium of Australian and Canadian investors.

The $7.4 billion transaction pays existing stockholders $30 per share, and means the company's shares will no longer trade publicly.

The utility subsidiary, Puget Sound Energy, serves 1 million electric and nearly 750,000 natural gas customers in Western Washington.

The proposed deal was announced Oct. 26, 2007. Shareholders and the Federal Energy Regulatory Commission approved the sale in April 2008, and the Washington Utilities and Transportation Commission gave its go-ahead on Dec. 30.

from: http://seattletimes.nwsource.com/html/businesstechnology/2008716162_webpugetenergy06.html