Judge signs off on proposed merger of GPU and FirstEnergy

Sep 06, 2001 02:00 AM

A New Jersey administrative law judge has signed off on the proposed merger of GPU and FirstEnergy, bringing the marriage of the retail electricity giants one step closer to the altar. The decision, which came, gives the New Jersey Board of Public Utilities until mid-October to make its ruling on the proposed merger.
If the board approves the application, the companies would need only the final blessing of the Securities and Exchange Commission to formally merge into the nation's sixth-largest investor-owned electric company. A GPU spokesman called the judge's decision a "significant step" in the complicated regulatory journey that has greeted the merger application.

The merger, which was first announced in August 2000, has been the subject of intense discussions by utility regulators in Pennsylvania, Ohio and New Jersey and has, at times, appeared tenuous. The staff of the New Jersey board in June recommended that the board reject the merger, saying that the companies have failed to prove that the combined company will provide better service, rates or reliability.
But regulators, consumer advocates and trade groups in the Garden State have spent much of the past three months hammering out an amended merger application that would satisfy those concerns. The discussions led to a settlement agreement in late August. That agreement was forwarded to the New Jersey law judge, who approved the terms.

In negotiating with New Jersey regulators, GPU and FirstEnergy outlined plans to eliminate 1,250 non-union jobs, or 9 % of the combined company's work force, if the deal is approved. The companies have not yet released how many of those cuts will affect workers in western Pennsylvania.
The combined electricity supply company would cover a massive stretch of territory -- from Toledo, Ohio, to the New Jersey shore. Included in the deal are GPU's customers in Erie County, who would become part of FirstEnergy's market.

The combined company would have 4.3 mm customers, $ 8.5 bn in equity and annual revenue of $ 12 bn. If the merger is approved, GPU customers in Pennsylvania would be protected from a rate increase until 2010, as the result of a June merger agreement approved by the state Public Utility Commission.

Source: The PMA Online Power Report
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