The parent company of Central Maine Power Co. is selling three natural-gas utilities in New England to help pay for a $1.4 billion upgrade of the power grid in Maine.

UIL Holdings said Tuesday that it will buy Southern Connecticut Gas Co., Connecticut Natural Gas Corp. and Berkshire Gas Co. from Iberdrola USA for $885 million. UIL Holdings also will take on about $411 million in debt.

Iberdrola USA, subsidiary of the Spanish utility Iberdrola, said the deal will help fund CMP’s first major upgrade of the grid in three decades. The project is aimed at ensuring reliability and creating capacity for future wind power projects in Maine.

“The investment will serve to continue guaranteeing electricity network reliability for customers in Maine and the New England region, providing it with the necessary capacity to incorporate new renewable energy sources,” said Michael McClain, who’s overseeing the project for Iberdrola.

CMP plans to double the capacity of the grid’s backbone in Maine with a new 345,000-volt transmission line from Orrington to Eliot. Overall, the improvements include 500 miles of new and upgraded high-voltage lines, as well as five new 345,000-volt substations.
Iberdrola will pay for the improvements, about half with cash and half through borrowing. The money will be recouped from electricity ratepayers in New England.

Besides ensuring reliability, the improvements will provide a conduit for wind farms to get electricity to power-hungry southern New England. One spur will take a high-voltage line to Rumford, bringing the grid closer to proposed wind farms in western Maine, said John Carroll, a CMP spokesman in Augusta.

A companion project would have connected northern Maine to the regional power grid for the first time, but that $625 million project was put aside.

Iberdrola said the decision to sell the three natural-gas utilities to UIL Holdings, parent of Connecticut’s United Illuminating Co., falls within its plan of selling non-strategic assets.

The three utilities have 369,000 customers in Connecticut and Massachusetts. They have a combined workforce of about 800. UIL intends to issue debt and equity to fund the cash portion of the purchase price; the deal is expected to close by early next year.

As for the power grid improvements in Maine, the Maine Public Utilities Commission gave its approval this month, and a final order is due by the end of June.

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