The pushback started with Virginia. Earlier this month, in a first, Gov. Abigail Spanberger filed to formally intervene in the NextEra-Dominion Energy merger announced in May: a $67-billion deal that would create the largest regulated utility in the world.
“As a Virginian, I am deeply skeptical about whether selling our primary state-regulated utility to an out-of-state company is good for the commonwealth,” the governor wrote in an opinion piece in the Washington Post, a few weeks earlier. Spanberger, a Democrat, went on to emphasize that the size and impact of the deal would be “unprecedented.”
Now New England has joined the fray, propelled by concerns about the regional energy impact of concentrating so much control in a single company — and reviving the spectre of a five-year-old fight over a major transmission line that NextEra tried and failed to block.
In Virginia, Spanberger said her priorities are protecting ratepayers from bill increases, preserving the state’s power sector jobs, and maintaining the state’s renewable energy transition. Now that she’s a formal party to the case, she has the power to serve discovery on NextEra and Dominion as the Virginia State Corporation Commission considers the case. If regulators approve it, she could hypothetically appeal to the state’s Supreme Court.
The state’s GOP lawmakers have also expressed concern, calling for a special session to give the SCC extra time to consider the merger. It’s the commission that will ultimately decide the deal’s fate, though parallel proceedings are underway with the Federal Energy Regulatory Commission, which has jurisdiction over Dominion’s interstate assets.
Last week, skepticism of the deal moved north. Via NESCOE, a regional committee representing the states’ interests in regional electricity matters, the governors of Connecticut, Maine, Massachusetts, Rhode Island, and Vermont said the merger “would concentrate an unprecedented amount of leverage in NextEra.” (Notably, New Hampshire, the sixth NESCOE member, did not sign on to the joint statement.)
Neither NextEra nor Dominion’s regulated utility territory stretches to New England; Virginia is the upper boundary of the region that the combined utility would cover. However, both companies have enormous unregulated footprints as well, owning energy assets across the U.S. And the two happen to own New England’s only still-operating nuclear power plants: Seabrook in New Hampshire, and Millstone in Connecticut.
In a separate statement, Maine Gov. Janet Mills said the “ill-advised” merger would give a single company too much control over the region’s generation and transmission assets. “This deal may be good for NextEra’s shareholders, but it’s a bad deal for Maine people,” she added.
It’s not just about the nuclear plants though. Another main cause of the push-back is a five-year-old fight over the 1.2-gigawatt New England Clean Energy Connect transmission line, carrying hydropower from Canada to New England via Maine. In 2021, NextEra intervened in multiple states permitting processes to try to block the project, and contributed $20 million to a Maine referendum against it. An ethics commission ultimately found that the company covertly funded two additional opposition groups as well.
“The states’ concern that these companies will act to disrupt and delay infrastructure development is not hypothetical,” they wrote in the NESCOE statement. “NextEra has chosen to spend its considerable resources to disrupt needed infrastructure development in New England while Dominion has used its resources to lobby for out-of-market payments under the threat of retirement, which could have had dramatic impacts on the region’s resource adequacy.”
What happens next
The question, however, is whether this pushback will have a real impact as regulators consider the deal. The companies have filed for approval with FERC, the Nuclear Regulatory Commission, and the utility commissions of Virginia and both Carolinas.
Virginia’s commissioners are appointed by the legislature and not the governor, which David Pomerantz, executive director at the Energy and Policy Institute, said suggests that they’re going to be more independent of Spanberger’s influence. However, he added that “it’s still reasonable to assume that what prominent office holders, including the leader of the Commonwealth and the Democratic party, are saying about it have an impact.”
Given that Spanberger ran on a platform of stopping bill increases, Pomerantz said, “it’s good policy and good politics for Gov. Spanberger to interrogate NextEra and Dominion about the consequences of this proposed deal.” He added that the “obvious next step” would be to call a special legislative session “to adjust Virginia’s outdated rules governing utility acquisitions.”
That said, Julien Dumoulin-Smith, who leads U.S. equity research on power and clean energy for the investment bank Jefferies, said he expects that the merger will actually prove to be a “win-win” for NextEra and Virginia, especially when it comes to job creation. As NextEra’s current headquarters of Palm Beach, Florida, faces a severe cost of living crisis, he said, the company would actually be inclined to allocate more employees to its planned-for second headquarters in Richmond instead.
“There’s a lot of alignment here between the state employment commitments, and some of the core issues that NextEra is facing,” Dumoulin-Smith told Latitude Media.
Meanwhile, the New England governors have virtually no control over the merger’s outcome. Their statement urges that FERC and other regulators use “the highest level of scrutiny” in reviewing the acquisition, but so far the states haven’t formally intervened.
And Dumoulin-Smith suspects that some of their concerns about concentrated market power post-merger could be resolved quickly by Dominion and NextEra submitting favorable long-term contracts for power from Millstone and Seabrook, respectively. Both nuclear plants have contracts with Connecticut utilities that are set to expire in 2029; a competitive procurement process that covers both has been underway since months before the merger’s announcement.
Essentially, the merger is a great backdrop to push for the result that at least Connecticut Gov. Ned Lamont has wanted all along, Dumoulin-Smith added: a favorable power contract that would keep costs predictable for ratepayers, in a moment when energy affordability is a main political priority.
“This is part of a song and dance on a negotiation that’s been simmering,” he said. “There is very much a…solution here that makes sense to a lot of folks.”
