Emera Reaches Settlement on $6.5 Billion Teco Deal in New Mexico

  • Emera agrees not to raise base rates before Dec. 31, 2017
  • Emera says it'll look at building gas pipeline to Mexico

Canadian utility owner Emera Inc. has reached an agreement with groups in New Mexico, including the state’s attorney general, on its $6.5 billion takeover of utility Teco Energy Inc., bringing the deal one step closer to completion.

Under the agreement, filed with the New Mexico Public Regulation Commission on Monday, Emera said it wouldn’t seek a base rate increase before Dec. 31, 2017; would evaluate a pipeline project that would increase the state’s gas-export capacity to Mexico; and would establish a $10 million matching fund to extend gas systems in underserved communities. New Mexico’s attorney general, the Public Regulation Commission’s utility staff and the New Mexico Industrial Energy Consumers were among those who signed the pact.

The settlement brings Emera closer to finishing a deal initially announced seven months ago. The Public Regulation Commission is scheduled to consider the proposal next month. The takeover is one of nearly 200 mergers and acquisitions of U.S. power and gas utilities announced in the past year, data compiled by Bloomberg show. The industry is consolidating as electricity suppliers grapple with weakening power demand.

‘Significant Benefits’

“The parties have worked together to develop a settlement that provides significant benefits to New Mexico Gas Co. customers and to communities across New Mexico,” Chris Huskilson, chief executive officer of Halifax, Nova Scotia-based Emera, said in a statement. “We look forward to working through the important remaining steps in the New Mexico regulatory process.”

In the stipulation filed Monday, Emera agreed to look at building an “enlarged” pipeline that would increase New Mexico’s capacity to send gas to Mexico. It also committed to $800,000 in charitable contributions and other efforts to improve economic development in the state.

Tampa, Florida-based Teco Energy owns the Tampa Electric utility that serves more than 725,000 customers and the Florida gas distributor Peoples Gas System, along with gas distributor New Mexico Gas, which is the largest utility in New Mexico, the company’s website shows.

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