The purchase of Maine by Enmax raises controversy south of the border

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The $ 1.3 billion purchase proposed by Enmax Corp. of a Maine-based power company is sparking controversy south of the border, where local legislators and union officials have wondered if the property's utility is City of Calgary is taking an alarmingly risky level of debt to finance the deal.

Gavin Young / Postmedia

The proposed purchase by Enmax Corp. of $ 1.3 billion of a power company based in Maine is causing controversy south of the border, where local legislators and union officials have wondered if the utility of ownership The city of Calgary is taking an alarmingly risky level of debt to finance the deal.

Enmax representatives – including CEO Gianna Manes – have been to the state of New England on several occasions in recent months to meet community leaders, employees and customers of Emera Maine, the publicly listed company Enmax intends to purchase as part of its efforts to diversify and grow its regulated electricity business. The agreement, announced in March of this year, is expected to be completed by the end of 2019 or the beginning of 2020, subject to a regulatory approval process currently underway.

The acquisition – which Enmax said will help generate stronger returns and potentially increase the annual dividend it pays to the city of Calgary – has been criticized here at home by those who fear that the utility is taking on too much debt . Just last week, the Standard & Poor credit rating agency downgraded Enmax by one level, from triple B + to triple B due to concerns about the $ 455 million debt the company is taking.

But the agreement was also examined in the United States, where interested parties wondered if Emera Maine customers and employees could suffer if Enmax takes on too much debt.

The Enmax power plant on 9th street south-east in downtown Calgary was photographed on Monday 25th March 2019.

Gavin Young /

Postmedia

"We just want to make sure they can manage this acquisition financially," said Dick Rogers, corporate director of the International Brotherhood of Electrical Workers Local 1837, which represents approximately 225 Emera Maine employees. "We are not against (the agreement). It could be a good thing, but we certainly have these concerns. And the number one is work."

In August, according to the Bangor Daily News, The president of the Maine Senate, Troy Jackson, said the state public services commission should make sure that Enmax does not over-exploit to finance the purchase.

"We don't want to see a situation where they have to raise really high rates just to cancel their debt, and we certainly don't want them to lay off workers, or a combination of both," says Jackson. "And so the PUC must make sure this is even workable to begin with."

The vice president of public affairs of Enmax, Diana Stephenson, stated in an interview that the company does not expect any reduction in the workforce or tariff increases for Emera Maine's 159,000 customers following the agreement. While Enmax said in March that the acquisition would be 100 percent funded, Stephenson said the deal should now be independently financed "using a percentage of debt financing".

"We remain confident and well prepared to repay this debt adequately over time," said Stephenson. "It is only natural that customers and interested parties have questions, and it is our responsibility to ensure that we are not only listening to these questions, but providing information."

The state of Maine has recently passed a new law requiring Enmax to demonstrate a "net advantage" to Emera Maine's taxpayers before receiving regulatory approval from the Public Service Commission. Previously, companies wishing to purchase public utilities in Maine had only to prove that the tax payers would not suffer any damage as a result of the proposed transaction.

reported

Last month, David Brevitz – a consultant for the Maine attorney's office, the Maine's leading consumer advocate – presented a testimony to the regulator saying that the deal proposed by Enmax does not meet the new standard.

"Unless there are additional protections or significant conditions put in place to provide tangible measures to address the financial risks created by the proposed transaction. . . it is not clear that there would be a net advantage for tax payers, "wrote Brevitz in testimony available to the public, which was published online by the Bangor Daily News.

Even the governor himself raised questions about the agreement. In a relationship released by the staff of the Public Utilities Commission and published online by the Bangor Daily News, the PUC states that it is concerned that "the city of Calgary could interfere or exercise an undue influence on the management and operations of Emera Maine".

The report also states that the regulatory authority fears that Enmax is taking on many debts to finance the agreement and could try to "extract" the earnings from Emera Maine by cutting infrastructure investments, operations and budgets. maintenance in order to meet its debt requirements related to the purchase ".

Stephenson said that all the questions raised so far are "expected areas of discussion" and added that Enmax is addressing them as the regulatory process continues.

"We continue to be actively involved in the ongoing Maine utility process and continue to focus on this," said Stephenson. "We hope to close in the initially planned period."

astephenson@postmedia.com

Twitter: @AmandaMsteph

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