Empire District Electric Co.’s proposed $2.4 billion merger with Liberty Utilities Co., a subsidiary of Canada-based Algonquin Power & Utilities Corp., took a step forward this week.
Empire and Liberty on Thursday filed an official stipulation and agreement with the staff of the Missouri Public Service Commission, noting that concerns the staff had outlined about the merger in testimony last month have been addressed.
“There are several conditions that the staff and various company entities have agreed to,” said Natelle Dietrich, director of the PSC staff. “So that’s what’s changed is we’ve reached agreements on applying these conditions."
Documentation of the parties’ stipulation and agreement show Empire and Liberty have agreed to conditions the staff requested regarding the company’s financing and credit ratings, depreciation regulations, customer service commitments, records access and conditions set forth in Empire’s pending rate case.
The PSC staff and the Office of Public Counsel previously filed testimony suggesting they would recommend that commissioners of the Public Service Commission not approve the merger without certain changes. Dietrich and her PSC staff say the conditions agreed to by Empire and Liberty have satisfy their concerns.
“We’re pleased to have reached the agreement with staff and continue to move forward with the process,” said Julie Maus, corporate communications director for Empire.
The Office of Public Counsel, however, has not changed its position, acting director James Owen said. In mergers like the one Empire and Liberty are seeking, the OPC’s role is to represent Missouri ratepayers and ensure the deal will not have a negative impact on them. The staff of the PSC considers the impact of the deal on the larger public interest, which includes shareholders and communities.
“We still have those concerns,” Owen said. “From our perspective, we’re still very concerned about how Empire and this new company is going to be responsible to consumers.”
Owen said he does not expect the OPC to change its position regarding the merger unless there is a change in negotiations between the parties before evidentiary hearings on the deal, which are scheduled for Aug. 29-31 in Jefferson City.
Maus said Empire would be filing surrebuttal testimony detailing the company’s position with regard to the OPC’s testimony in which it outlined its concerns.
Several other groups that had filed to intervene in the deal gave conditional approval last month. The Empire District Retired Members & Spouses Association, the city of Joplin and International Brotherhood of Electrical Workers locals 1464 and 1474 all gave conditional approval to the merger, which was announced in February.
Conditions include, respectively, continuation of benefits for Empire's more than 300 retirees and spouses; continued participation with the Joplin Area Chamber of Commerce and other community and economic development initiatives for the city; and no layoffs for the 400 members of the IBEW bargaining units.
The Midwest Energy Consumers Group, an organization representing large Empire customers, such as Wal-Mart and Tyson, has not formally taken a position, according to online filings with the PSC.
David Woodsmall, attorney for the group, said last month his clients had concerns similar to those the OPC and PSC staff had at the time.
It is unknown whether the position of the MECG has changed, as that of the PSC staff has. Attempts to reach Woodsmall by phone Friday were unsuccessful.
Empire's board of directors discussed a merger for the first time last fall, when it initiated talks with a number of companies, none of which has been identified other than Algonquin. In December, the news that Empire was exploring a sale went public; Algonquin and Empire announced the proposed merger in February.
According to the terms of the merger agreement, Algonquin has agreed to pay a 21 percent premium on Empire's stock, and the company has committed not to pass that cost along to ratepayers.
Empire CEO Brad Beecher has previously said the merger will not adversely affect any parties in the deal, including employees, the city, and retirees and spouses.
Beecher also has said that no net job loss is expected and that the merger could potentially result in the creation of jobs because Empire, which now serves 215,000 customers, will become the regional headquarters of electric, water and gas operations for Liberty operations in seven states, serving 340,000 customers.
An evidentiary hearing in Jefferson City on the proposed merger of Empire District Electric Co. and Canada-based Algonquin Power and Utilities Corp. is set for Aug. 29-31.