Massachusetts Attorney General, National Grid spar over merger hearing  

Massachusetts Attorney General Martha Coakley has objected to suggestions from National Grid plc on how to structure hearings that are scheduled to begin July 29 on the company's already-completed
acquisition of KeySpan Corp.

In order to review "the numerous issues raised by one of the largest utility mergers in Massachusetts history," at least two days of hearings are needed, Coakley said in a filing July 22 to the state's
Department of Public Utilities. A third day will be needed for presentations by the attorney general's witness, Coakley said.  National Grid, through its U.S. utility subsidiary National Grid USA, which is headquartered in Massachusetts, completed the acquisition of New York-based gas company KeySpan in August 2007.

Massachusetts had no regulatory authority over the acquisition, and Coakley in April 2007 requested the state utilities regulator at the time, the Department of Telecommunications and Energy, to open an investigation to look at how the deal would affect National Grid's operations in the state. Leading up to the upcoming hearings, Coakley objected to National Grid's proposal to present new witnesses, present an update of testimony given last year, present rebuttal testimony of the attorney general's witness and exclude gas distribution issues from the merger case for separate consideration. "The Attorney General ... opposes any last minute attempt by the company to narrow the scope of this proceeding or to use a separate procedural conference as a vehicle to further delay or limit this case," Coakley said in her filing.

National Grid has proposed to discuss, separately from the merger investigation, gas distribution service quality and gas distribution companies' mains and services replacement programs because the
company believes these issues were not relevant to the investigation, spokesman David Graves said.
The procedural motion National Grid presented July 18 is what the company considered a logical way to proceed with the hearings, Graves said. The hearings have been scheduled and postponed for at least six months. The attorney general's office has made 600 data requests that the company has complied with, and "we will continue to comply with their requests," Graves said. National Grid suggested in its filing that an update of company operations be given since "it has been over a year since the Company's pre-filed testimony was submitted." Because one of National Grid's previous witnesses retired and another witness is now working in a different capacity, the company proposed new witnesses for a panel presentation.

Coakley objected to the new witnesses with updated information, stating that she would not have an opportunity to prepare for crossexamination of the panel witnesses or brief the issues. Furthermore, to call the testimony already filed "outdated," though it was based either on predictions or facts presumably known at the time, "undermines the credibility of the company's original filings," Coakley said. If the testimony is outdated, then the company "should be compelled to update its testimony in advance in writing and not to simply disregard it and avoid further examination of the filing," she said. Among the issues to be addressed in the proceeding were the costs and benefits of the acquisition to Massachusetts customers, reporting requirements and penalties for failure to improve preexisting
system safety and reliability problems, and assurances that Massachusetts customers receive benefits from the acquisition that are at least equal to those of the company's customers in other states, and that benefits to customers in other states do not cost Massachusetts customers. In the future, the Massachusetts attorney general will be able to review a merger request, since the Green Communities Act, just signed by Gov. Deval Patrick, provides that authority.

National Grid distributes electricity to nearly 5 million customers and delivers gas to 3.4 million customers in Massachusetts, New Hampshire, New York and Rhode Island.