BATON ROUGE (AP) — State regulators rejected a $5 billion deal on Wednesday to sell power company Cleco to a private investment group, a week after an administrative law judge found that the sale was not in the public's interest.
The Advocate’s Mark Ballard reports that the Louisiana Public Service Commission voted to reject the proposed sale. The vote was 5-0.
Last week, an administrative law judge charged with vetting the deal found the sale would not be in the best interest of the utility company's customers.
The sale was negotiated, mostly behind closed doors, for the past 17 months. The deal would have been good for Cleco shareholders, who would have sold their stock at a 15 percent premium.
Based in Pineville, LA, Cleco Power LLC. sells electricity to about 286,000 customers.
PSC Chairman Clyde Holloway, R-Forest Hill, said he didn't like "the tax scheme" included in the deal.
Under the deal, the new owners of Cleco would have been able to pocket taxes collected as part of the monthly rates, rather than turning the proceeds over to state and federal authorities.
Holloway also didn't like that the locally-owned company would be bought by Australian and Canadian investors who planned to sell the utility in eight to 10 years. The consortium of investors was led by Macquarie Infrastructure and Real Assets, based in Sydney, Australia.
The "double leverage" method of financing the $4.85 billion transaction would allow the buyers to use borrowed money to borrow more money, leaving the possibility that Cleco customers could be held responsible for the debt.
But PSC Commissioner Eric Skrmetta, a Metairie Republican, said ratepayers weren't asked to pay for the transaction.
In fact, had the transaction taken place, rates would have been lowered — both from a $125 million cash credit the buyers would have given Cleco customers and from additional efficiencies.
Holloway said $125 million sounds like a lot of money, but it would have been spread over 15 years. That means the typical residential customer using 1,250 kilowatt hours of electricity would have seen only a $1.58 decrease in their monthly bill.
Darren Olagues, president of Cleco Power LLC., testified that the deal would benefit shareholders, keep the company in Pineville and strengthen its finances.
