Enmax's bid to buy Maine electrical utility hits setback

A bid by the Calgary-owned Enmax to purchase an electrical utility in the United States hit a roadblock Thursday when a state regulator rejected its proposal.

In March 2019, Emera Inc. signed a deal to sell its operations in Maine to Enmax in a deal valued at $1.8 billion in Canadian dollars, including debt.

But a 2-1 decision issued Thursday by Maine's Public Utilities Commission rejected that deal, with members of that commission voicing concerns about Enmax's decision to take on debt to pay for the takeover.

The commission is also worried about Emera's ability to pay for system upgrades if Enmax doesn't have the cash to help out in that regard.

Philip Bartlett, one of the members of the commission, raised concerns about Standard and Poor dropping Enmax's rating by one level last fall, from triple B+ to triple B due to concerns about the utility's debt.

"Due to the proposed transaction, Standard & Poor's has downgraded ENMAX's credit rating and added a negative outlook," Bartlett said. "The likely result is that ENMAX will have difficulty accessing capital markets for additional debt for the next several years to provide any capital infusion to Emera Maine.

"Emera Maine will largely be on its own and able to invest only what it can to finance itself."

Helen Wesley, CFO of Enmax, said today's deliberation was just another step in the regulatory approval process, of which there have been many.

"The reaction, or the outcome from today, was very much within the range of expected outcomes for Enmax," Wesley said. "We are working very collaboratively and quickly with the commission to respond to their requests for some changes to the stipulations."

Wesley called the process "fairly typical" and said Enmax was very comfortable they would be able to address the commission's concerns in a matter of "weeks, and not months."

"After the deliberation this morning we quickly regrouped with commission staff and we're working on revising the stipulation so that we can get it back in their hands in very short order," Wesley said. "I suspect we'll be in good shape within a few days to resubmit something."

Emera Maine, a regulated electric transmission and distribution company, is headquartered in Bangor, Maine, serving 159,000 customers in the northern and eastern part of the state.