Puget Energy wins over some critics

Some critics of a takeover of Puget Energy by a group of Australian and Canadian investors have reached a proposed settlement with the utility and the potential buyers that resolves all their issues with the $7.8 billion merger, according to a letter filed by the parties Monday with the Washington Utilities Commission.

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 like Boeing and Microsoft; the Energy Project, which represents low-income ratepayers; and other critics. The Cogeneration Coalition has said it will not oppose the deal.

But not all parties that objected to the merger, which would take Washington's largest utility private, agreed to the settlement.

The Attorney General's Public Counsel office, which represents Washington ratepayers, is not expected to sign on to the agreement, the letter says. The office couldn't be reached for comment late Monday.

The terms of the proposed settlement were not disclosed, but the changes, compared with what was originally proposed by a consortium of buyers led by Australian investment bank Macquarie, were "substantial," said Ron Roseman of the Energy Project.

Details will be filed today or Wednesday with the Utilities and Transportation Commission (UTC), which must review the settlement and has the final word on the acquisition.

The settlement — reached after negotiations that started the week of July 7 — may surprise those anticipating that it would be difficult for Macquarie and its partners to convince critics that the takeover would not harm Washington customers.

Last month, UTC staff called the deal potentially risky, because the consortium was borrowing money to pay for the utility. The higher debt level could damage Puget Energy's credit ratings, making it harder to raise money for infrastructure investments, and potentially adding pressure to raise rates, opponents argued.

Mike Parvinen, the UTC's assistant director for energy, said then that the staff "could not identify enough mitigating factors or benefits to recommend anything other than denying the petition."

In early July, the takeover proponents sought to assuage criticism by offering to take $100 million off any potential rate increases during the next 10 years and promising to forgo dividends if the utility's earnings dropped to a level that threatened its credit rating.

The commissioners had scheduled an evidentiary hearing on the merger proposal in Olympia starting July 28. The parties that filed the settlement will ask the commission to suspend the hearings. They requested a prehearing conference to be held as soon as possible.

Puget Sound Energy, which serves more than 1 million electric customers and 735,000 natural-gas customers, is a subsidiary of Puget Energy.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com