State regulators have approved the sale of Puget Sound Energy for $7.4 billion to a group of investors from Canada and Australia.
The state’s largest private utility was sold to New York-based Puget Holdings LLC, the Washington Utilities and Transportation Commission announced Tuesday. While based in New York, the company is held by foreign investors.
The sale was supported by the commission’s staff, Industrial Customers of Northwest Utilities, Northwest Industrial Gas Users, The Kroger Co., The Energy Project and Northwest Energy Coalition.
Bellevue-based PSE is the state’s largest electric and natural gas utility, serving more than 1 million electric and 737,000 natural gas customers, primarily in Western Washington. The sale was proposed in late 2007.
It was opposed by the Public Counsel Section of the Attorney General’s Office, which issued a statement Tuesday concerning the commission’s 2-1 decision.
“This is a lengthy order and we’re still reviewing the details, but our initial review leads to disappointment,” said Simon ffitch, section chief. “We believe the thousands of Puget Sound Energy customers who voiced their opposition to this sale will feel the same.”
The Public Counsel Section, which advocates for the interests of consumers on major rate cases, had repeatedly expressed concerns that the settlement provisions do not do enough to address public interest concerns with the sale.
“The commission’s order concludes that certain conditions and clarifications stated on paper will be sufficient to protect customers. The question now is whether they will be enough in the real world,” the section said in a news release.
Commissioner Philip Jones, who opposed approval of the sale and who filed a separate dissent, said the settlement agreement “creates too much risk, and potential harm, for ratepayers and stakeholders. I believe the settlement has been overtaken by market conditions that require further exploration on a full record that carefully analyzes critical aspects of the proposal under the reality of extremely adverse financial conditions that exist today.”
Jones pointed to what he called a capital structure “with excessive debt” and a consortium that “lacks sufficient transparency compared to the status quo.”
Responding to the public counsel’s characterization of the venture as “a risky, highly leveraged, private equity buyout that will reduce the commission’s ability to effectively regulate PSE,” the commission majority said “this is an almost entirely inaccurate description of the transaction … it is not a ‘highly leveraged buyout.’”
The commission majority said the investors buying the utility are comprised overwhelmingly of government and private pension funds and endowments that can provide a stable source of capital to fund infrastructure improvements PSE requires.
The commission said it would maintain full regulatory power over the utility and would enforce a requirement that there be “as much or more local control as exists today.”
Parties to the case have 10 days to ask the commission to reconsider or clarify its position, and 30 days to appeal the decision to the Superior Court, according to the commission release.
The sale has been approved by federal regulators and by the board and shareholders of PSE.
The Associated Press, Bloomberg News and News Tribune staff writer C.R. Roberts contributed to this report.