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Behind the sound bite: NStar-Northeast Utilities merger

The Patrick administration last month reached a major agreement with Northeast Utilities and NStar that would allow a merger of the two utility companies in exchange for a four-year rate freeze and a 15-year contract to buy power from Cape Wind. If regulatory approvals come through, it would create the largest utility in New England.

Why does Cape Wind enter into the picture?

The deal would commit the merged utility to buying 27.5 percent of the power generated by Cape Wind, the planned offshore wind energy project in Nantucket Sound.

How much power would the company have to buy?

The company is committing to buy 129 megawatts of power over 15 years. This would, according to the Massachusetts Department of Energy Resources, meet the utility’s need to achieve greenhouse gas reduction goals and renewable energy requirements under the commonwealth’s Green Communities Act.

What’s the timetable for Cape Wind?

Construction is set to begin next year, according to project owner Cape Wind Associates. It secured permits and a U.S. Department of Interior lease. But if Cape Wind does not break ground by 2016, the merged utilities will buy the energy from another source.

Does everyone agree this is a good thing?

No. Associated Industries of Massachusetts says the merger would create ratepayer savings, but will be offset by Cape Wind’s $2.5 billion cost.

What about NStar customers?

The agreement would provide a one-time rate credit of $21 million for 1.6 million residential customers.

What happens next on the regulatory end?

The utilities have requested state DPU approval by April 4. Approval from Connecticut, where Northeast is based, is due around that time.