UPDATE: May 24, 2022: The Rhode Island Superior Court on Monday issued orders clearing the way for PPL Corp. to acquire Narragansett Electric Co. from National Grid USA. The court's decision follows a settlement agreement addressing concerns raised by the state attorney general's office.
As part of the settlement, PPL will provide $50 million in bill credits to Narragansett Electric customers, seek approval to forgive more than $43 million in arrearages for low-income and other customers, and forego recovery of costs associated with the acquisition and integration of the utility.
PPL said it expects to complete the acquisition of Narragansett Electric this week. Also as part of the settlement, PPL intends to deliver an "Act on Climate Report" within one year of the acquisition to the Rhode Island Public Utilities Commission and attorney general's office.
UPDATE: Jan. 20, 2022: Regulators should reject PPL Corp.'s bid to acquire the Narragansett Electric Company from National Grid USA, rather than subject customers to possible rate increases and declines in service, consumer advocates and the Rhode Island attorney general's office said in a pair of Tuesday filings.
"Overwhelming record evidence shows the adverse impacts that approval on the terms proposed will have on Rhode Island ratepayers," the Division of Public Utilities and Carriers' Advocacy Section wrote.
Because National Grid also owns distribution utilities in Massachusetts and New York, Rhode Island customers "reap the benefits" of a shared services arrangement, the advocate said. Sale of the utility would "result in the loss of the shared service synergies that Rhode Island customers enjoy under the current structure."
The attorney general's office concurred, arguing PPL and National Grid have failed to show how they will remove Narragansett Electric "from the carefully integrated regional system of synergies developed by National Grid over decades without either degradation of services or significant rate increases."
PPL filed its own comments, arguing that opponents of the deal are ignoring established standards of review.
"The numerous commitments that PPL has made to facilitate Narragansett’s transition ... confirm that PPL’s ownership will not impair the ability of Narragansett to provide safe and reliable service," the utility said.
UPDATE: Sept. 28, 2021: FERC on Thursday approved PPL Corp.'s bid to acquire the Narragansett Electric Company from National Grid USA. The deal now only requires approval from the Rhode Island Division of Public Utilities and Carriers in order to move forward. PPL said in a statement the deal is expected to be completed by March 2022.
Dive Brief:
- National Grid and PPL Corp. on Thursday announced two major transactions they say will help each company better its align its assets and clean energy strategies. The largest deal involves PPL selling its United Kingdom utility business, Western Power Distribution (WPD), to National Grid for almost $11 billion.
- Separately, PPL will also acquire National Grid's Rhode Island utility business, the Narragansett Electric Company, for an equity value of $3.8 billion. And, National Grid says it is initiating a sale process for a majority stake in its U.K. gas business.
- PPL announced in 2020 that it intended to shift its focus to U.S. utility investments, saying a simplified corporate structure would boost shareholder value. National Grid says it wants "increased exposure" to the U.K.'s electricity sector, where it plans "a more holistic approach" to the country's net zero carbon ambitions.
Dive Insight:
PPL President and CEO Vincent Sorgi said the deals announced Thursday will help the company to "refocus" on the U.S. utility market, where it sees potential for growth through clean energy investment.
The transactions "will refocus our business mix squarely on strong, rate-regulated U.S. utilities; strengthen our credit metrics; enhance long-term earnings growth and predictability; and provide us with greater financial flexibility to invest in sustainable energy solutions for those we serve," Sorgi said in a statement.
"The strategic transactions we are announcing today immediately unlock value for shareowners and achieve the objectives we set out in launching the process to sell our U.K. utility business," Sorgi added.
The acquisition of Narragansett Electric is a transaction valued at $5.3 billion, including the assumption of approximately $1.5 billion of debt. PPL says it plans to use a portion of the proceeds from the sale of WPD to finance the acquisition.
Sorgi said PPL plans to "play a key role in advancing Rhode Island's decarbonization goals." He said the company's experience in automating electricity networks "can help the state achieve its target of 100% renewable energy by 2030."
PPL says the U.K. sale is expected to close within four months, while the Rhode Island acquisition could take a year.
Once both deals are complete, Pennsylvania-based PPL says it will serve approximately 3.5 million electricity and gas customers, including 780,000 customers from Narragansett Electric's electric and gas distribution businesses. WPD serves 7.9 million customers in central and southwest England and south Wales.
National Grid CEO John Pettigrew called the deals "transformational," in a statement focused on "repositioning" the company's portfolio.
When all three transactions are completed, Pettigrew said, nearly 70% of the company's assets will be focused on electricity — up from around 60% now. "That's very significant at a time when electricity demand is expected to rise substantially in the years ahead," he said. Electricity demand in the U.K. is expected to increase 70% by 2050, he said.
"As the largest electricity transmission and distribution owner and operator in the U.K., we'll play a pivotal role in enabling growing levels of electrification," he said.
