Shareholders, FERC approve Puget merger with investment group

Shareholders of Washington-based Puget Energy Inc., and the Federal Energy Regulatory Commission, have approved the $7.4 billion merger of Puget and an international investment consortium led by the Macquarie Group.

Puget Energy is the parent company of Puget Sound Energy, which owns and controls transmission, distribution, and generation facilities, including hydropower, in the Pacific Northwest. The Macquarie Group is a non-operating holding company that, through affiliates, owns infrastructure assets throughout the world.

Puget Energy shareholders on April 16 overwhelmingly approved the merger, proposed by the Macquarie-led group last year. (HNN 10/26/07) Under the terms of the deal, Puget shareholders will be entitled to receive $30 in cash in exchange for each share of Puget Energy common stock they own.

FERC approved the merger April 17, particularly complimenting the deal’s “ring-fencing” provisions to protect Puget Sound Energy ratepayers against cross-subsidization between Puget and other holdings.

“This transaction will bolster Puget’s financial strength and lead to a more robust electricity infrastructure in the Pacific Northwest,” FERC Chairman Joseph Kelliher said.

The deal still is subject to review and approval by the Washington Utilities and Transportation Commission. The company said it expects the merger to be completed in the second half of this year.

The acquisition is being led by Macquarie Infrastructure Partners, the New York-based subsidiary of Macquarie Bank of Australia that purchased Pittsburgh utility Duquesne Light Holdings Inc. for $1.59 billion in 2007. Other members of the consortium include the Canadian Pension Plan Investment Board, British Columbia Investment Management Corp., and Alberta Investment Corp.

Puget generates 45 percent of its power from hydro sources, 17 percent from natural gas, 34 percent from coal, and 2 percent from wind. It has about 2,400 MW of generation capacity and purchases about two-thirds of the power needed to serve its customers. It expects its service area’s population to grow by 28 percent, or 1 million people, over the next two decades.

Puget’s wholly owned hydro projects are 170.03-MW Baker River in northwest Washington (HNN 7/19/07), 44-MW Snoqualmie Falls east of Seattle, and 26-MW Electron southeast of Tacoma. It also buys power from the hydro projects of Chelan County Public Utility District. (HNN 4/26/06)

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