PARIS — Spanish utility Iberdrola will list an 18.5 percent stake in its new U.S. grids and renewables unit Avangrid in New York on Thursday, its chief executive told Reuters, as it looks to raise finance for its multibillion-dollar investment plans.
CEO Ignacio Galan declined comment on Avangrid’s likely valuation on the New York Stock Exchange, but a market source estimated it at between $10 billion and $12 billion.
The new company, the result of Iberdrola’s $3 billion takeover of U.S. gas and power utility UIL Holdings Corp and subsequent merger with Iberdrola’s U.S. activities, will be one of the three largest vertically integrated utilities in the United States, with assets of $30 billion and operations in 25 states.
It combines Iberdrola’s power and gas distribution grids in New York state and Maine, with UIL’s grids in Massachusetts and Connecticut, making Avangrid a major operator in the northeastern United States, serving about three million people.
John Carroll, a spokesman for Avangrid, based in Maine’s corporate offices, said in a phone interview that the merger won’t change much for the about 600,000 customers of Iberdrola-owned Central Maine Power Co. in the southern half of the state.
“It has very little immediate impact for customers at all,” he said, adding the merger reflects a longer-term growth strategy for corporate parent Iberdrola.
Regionally, Carroll said the merger will mean the company has more resources in the event of an emergency, with the new footprint across the Northeast.
The merger also includes the U.S. gas storage and renewable energy operations of Iberdrola, which has 5.6 gigawatt of installed wind capacity in 18 states and is the second-largest wind operator in the Unites States after Nextera.
Interviewed in Paris, Galan said Avangrid could invest between $500 million and $600 million a year on average in coming years, with peaks of up to $1.5 billion depending on the Production Tax Credits, or PTC, Avangrid can obtain for renewables projects and on approvals for new grid projects in the northeast.
He added that Avangrid’s grid investments will depend on project approval for new lines in the northeastern United States, while renewables investment will depend on getting PTCs.
Galan also noted there was huge untapped hydropower potential in Quebec, Canada, and huge wind potential in the northeastern United States, but that major grid investments would be necessary to bring renewable power south.
As a regulated network operator, Avangrid is not allowed to build power generation assets in the areas where it operates the grid, though it can produce power in other areas.
Galan said Avangrid is considering grid investment projects in the northeast, together with other grid distribution companies.
Massachusetts, Rhode Island and Connecticut in February requested proposals by early next year from renewable energy and transmission companies as part of a joint procurement to meet their renewable energy goals.
Iberdrola, Europe’s biggest utility by market value, entered the United States in 2006 as a wind developer and acquired U.S. Energy East in 2008.
Avangrid, which will have about 7,000 employees and which will be run by former UIL chief executive James Torgerson, will account for about 30 percent of Iberdrola group sales.
One-third will come from Europe and another third from Britain, where Iberdrola owns Scottish Power and operates distribution grids in Scotland, Wales and the north of England and has power generation assets in southern England.
Galan said for the moment Iberdrola is not considering a separate listing for its UK unit, which has assets worth about 20 billion euros, or $22 billion.
BDN writer Darren Fishell contributed to this report.