Tuesday, October 12, 2010

Rendell Says No to Utility Merger, Companies say Yes

In a letter to the Pennsylvania Utility Commission PA Governor Ed Rendell says the proposed merger of FirstEnergy and Allegheny Energy would kill 980 jobs in southwestern Pennsylvania and harm competition in electricity markets. He says the move is especially troubling because it comes at a time when prices are rising due to the expiration of rate caps. Rendell directed the Department of Environmental Protection to file a brief on behalf of the commonwealth with the PUC urging the commissioners to deny the merger request. "This merger would be a great deal for Wall Street and Ohio, but terrible for Pennsylvania's workers and consumers," says Rendell. He says the merger would create an “electrical behemoth” that would “further increase the already-rising electric rates paid by families, employers, local governments and schools.” The governor says he reviewed the application and feels it, “lacks any positive environmental effects, energy efficiency incentives or increases in renewable energy.”

In a joint statement from FirstEnergy and Allegheny Energy, the companies say, "We respectfully disagree with Governor Rendell's position on our proposed merger. The merger will create a stronger company, better positioned to deliver significant immediate and long-term benefits to the Commonwealth of Pennsylvania, including operating efficiencies that would result in better service reliability and prices for customers.” The statement goes on to point to several organizations have come out in support of the merger including the International Brotherhood of Electrical Workers, the Utility Workers Union of America and “economic development and chambers of commerce groups, such as the Butler, Pa. County Economic Development Corp., Greater Johnstown-Cambria County Chamber of Commerce and the PA Economic Development Association.” The heads of the two power companies say a merged company provides the best opportunity for employment and economic growth in Pennsylvania.

I an effort to address Governor Rendell’s concerns over job losses, FirstEnergy says it has, “delayed hiring in order to accommodate Allegheny Energy employees, and will look for ways to provide additional career opportunities.” Rendell also voiced concerns that Pennsylvania would lose the Allegheny Energy headquarters office in Greensburg because the merged company will operate out of Akron, Ohio. FirstEnergy says it has, “committed to locate a regional headquarters in Greensburg.” The company says it also plans to work with local community colleges to establish a Power Systems Institute program. FirstEnergy has three other such institutes where it educates and trains future utility workers.

In closing the two companies say, “While we are disappointed that Governor Rendell does not recognize the many benefits of the FirstEnergy and Allegheny Energy merger, we will continue to work through the process to secure the needed regulatory approvals. The process remains on track. We are confident that the Pennsylvania Public Utility Commission will look at the record of the case and base a decision on the merits.”

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