Suez Energy of North America acquires Housatonic hydro plants River

FALLS VILLAGE —A multinational corporation has signed an agreement to acquire 15 American power generation plants, including the six Housatonic River hydropower plants. These include the plants on the Great Falls in Falls Village and at Bull’s Bridge in Kent.

The Housatonic River plants, and a significant amount of undeveloped open land around them, were formerly owned by Northeast Generation Services , the parent company of Connecticut Light and Power.

Northeast renewed the federal operating licenses for the plants in 2004, after seven years of meetings, hearings and sharp disagreements among users of the river.

The  license remains in force for 40 years, until June 2044.

In 2006, Northeast sold the plants (and nine other generating facilities) to Energy Capital Partners, a private equity firm based in Short Hills, N.J. There was little practical difference in how the plants were run; the same management team remained in place, including Robert Gates, who is the longtime station manager for Connecticut Hydro. The power facilities were grouped under the name First Light.

If all goes as expected, First Light will now become the property of Suez Energy North America, a division of Paris-based GDF Suez, which was created in July 2008 as a partnership between Gaz de France and Suez, described in Wikipedia as a “water supply and treatment, waste management and energy company.�

No changes are expected

Most state and local officials say they don’t anticipate there will be any problems created by the ownership of the Connecticut hydropower generating facilities by a company headquartered in a foreign country.

The planned purchase was announced Sept. 2.

“My understanding is that we won’t even know that there has been a change of ownership,� said Falls Village First Selectman Patricia Mechare. “That indicates to me that they are going to be community friendly and that our local folks who are employed there will remain, that nothing will change for them.�

She expressed confidence in the company’s ability to manage the plant, noting that it is the second largest energy company in the world and that it emphasizes production of green power.

There will not be any changes in the property taxes paid to the town by the company in the near future, she said.

“We just did a reval and all the taxes are up to date.�

Kent First Selectman Ruth Epstein said she is not worried about any service changes due to the buyout.

“I spoke with the company and I have been reassured that there will be no difference in service,� Epstein said. “I am not worried at this point.�

Suez will not set consumer rates

In Connecticut, the power industry was deregulated in 1998, and was split into three categories: generation, transmission and distribution.

The power plants along the river fall into the category of generation. The power they produce is sold on the spot market, and rates are set by demand. They change hourly, according to Philip Dukes, a spokesperson for the state Department of Public Utility Control. That agency has the power to approve or disapprove all requests for rate increases for transmission and distribution — but not for generation.

Dukes said that Suez Energy North America will not determine what Connecticut residents pay for their electricity. In this state, he said, it is still the distribution and transmission pieces of the energy pie that control the rates. Those specific companies are Connecticut Light and Power and United Illuminating.

State Sen. Andrew Roraback (R-30) expressed some concern about the purchase of the hydroplants by a foreign company. He noted that Connecticut’s water supply is also owned by a foreign company, Australia’s Macquarie Group (and was formerly owned by a British company called Kelda).

“I think the Europeans in a strange way recognize the value of our energy and water in a way that should be a wake-up call for us Americans,� he said.

The sale points to two growing trends in finance: the growth of multinational companies and the weakness of the American dollar compared to the Euro.

“This is globalization,� said Dan McGuinness, executive director of the Northwestern Connecticut Council of Governments, an organization of first selectmen from nine Northwest Corner towns. “Look at our trade deficit. We’re not making anything here anymore. They’ve got to do something with the dollars, what else are they going to do, turn them into wallpaper?�

Government oversight

This week, questions remained about which government agencies will have a say in the sale of the power facilities.  A spokesperson for the Federal Energy Regulatory Commission (FERC), Celeste Miller, said her agency does not have any say in the sale; nor does the Department of Public Utility Control, according to Dukes.

However, Julie Vitek, a spokesperson for Suez, said that the sale does in fact have to be approved by FERC as well  as by the Federal Communications Commission, the Department of Justice and the Federal Trade Commission.

Jim Ginetti, a spokesman for First Light, also said his company will have to undergo government scrutiny and that the sale will not be finalized until later this year or early next year.

Connecticut Attorney General Richard Blumenthal also said that, “There are opportunities for oversight and scrutiny,� he said.

He said he is “deeply concerned about this change in ownership because so much is at stake in environmental protection as well as consumer service. We will be scrutinizing this deal and we will oppose it if it is against the public interest.�

Investing in the plants

Ginetti of First Light said the sale to Suez will be a good thing for the power plants. For one thing, he said that Energy Capital is an investment firm while Suez is an energy company. It’s likely to be more of a long-term investment, he said.

U.S. Congressman Chris Murphy (D-5) said that his main concern in the sale of the plants to Suez is that “it’s very troubling when an important asset like that is used merely for profit.�

Ginetti offered the flip side of that, noting that Energy Capital had invested a good deal of money in maintenance and repairs at its facilities. When they were owned by Northeast Generation, he said, “the fleet was only available 70 percent of the time.� Under Energy Capital, he said, the fleet has been up and running 88 percent of the time.

“If a plant isn’t able to run, you don’t make any money,� he said. “Think about owning a car. If it had been unavailable 22 percent of the time, and now it’s unavailable 11 percent of the time, that’s an improvement.�

Officials said there is no need to be concerned about a foreign power owning a domestic power resource because hydropower cannot be stored or transmitted off the continent.

“Electricity has to be physically moveable,� Ginetti said, echoing a similar comment made by Dukes at the Department of Public Utility Control. “There are losses when you move it from one location to another. Most of the power that is generated here is consumed here.�

One Web site said that Suez has already contracted to sell some of its power to the Pentagon. Ginetti said that so far no deals have been made with anyone.

Vitek also said that no deals have been made with the Pentagon and added that profits from energy produced in a particular region are then reinvested in that region —or “that part of the globe,� she said, a reminder again of the scope of Suez’s holdings.