Allegheny Energy, FirstEnergy tout merger benefits
The town of Smithsburg is shown Friday night. The impending merger of Allegheny Energy and FirstEnergy could lead to more charitable donations for the local community as well as modest rate credits or reductions for Allegheny's customers and more backup for repairs after major outages, officials with the two utility companies said. (By Colleen McGrath. Staff Photographer)
On Tuesday, the Maryland Public Service Commission approved the merger with 20 conditions, most of which were consistent with a previous settlement agreement. That started the clock on the 30-day period the merging companies have to respond to the commission's order and left one more regulatory hurdle to clear — approval by the Pennsylvania Public Utility Commission.
The Pennsylvania commission does not have a deadline to act on a proposed settlement, but FirstEnergy spokeswoman Ellen Raines said company officials were comfortable the merger probably would be completed by the end of March.
The resulting company, FirstEnergy, will at least temporarily be the largest electric utility in the nation based on number of customers served, Raines said. The merged companies would serve more than 6 million customers from Ohio to New York.
The merger has cleared U.S. Department of Justice review and was approved by the Federal Energy Regulatory Commission, the Public Service Commission of West Virginia, the Virginia State Corporation Commission and shareholders for both companies.
Akron, Ohio-based FirstEnergy and Greensburg, Pa.-based Allegheny Energy announced the proposed merger Feb. 11, 2010.
While FirstEnergy will be the parent company, it will look to Allegheny's roots for company names in the Allegheny service areas. Customer bills will be issued under the Potomac Edison name in Maryland, West Penn in Pennsylvania and Mon Power, formerly Monongahela Power, in West Virginia, Allegheny officials said.
Giving somethig back
The utilities have agreed to provide rate credits or reductions of varying amounts to Allegheny's customers in Maryland, Pennsylvania and West Virginia.
The original merger proposal called for a $2.5 million rate credit for Allegheny's Maryland customers, but that amount was increased, with Maryland PSC approval, to $6.5 million.
The PSC's conditional approval calls for FirstEnergy to pay the credit, which works out to about $29 for each residential customer, in a single payment within three months of the merger's completion rather than in monthly installments over four years, as had been proposed.
In a Dec. 28, 2010, case filing, the staff of the Maryland PSC requested a minimum rate credit of $26.2 million — about $120 per customer. The Office of People's Counsel, a utility consumer advocacy office, had asked for a $54 million rate credit over five years, according to a Dec. 28 filing by the office.
In West Virginia, customers of Mon Power would receive $7.5 million in rate reductions over a two-year period. The Expanded Net Energy Cost rate charge on bills will be reduced, saving customers $2.5 million in 2012 and $5 million in 2013, according to the Public Service Commission of West Virginia's Dec. 16, 2010, order and Raines.
In Pennsylvania, West Penn Power residential customers would receive almost $11 million in customer credits during a three-year period, according to an Allegheny Energy news release about a proposed settlement with the Pennsylvania commission.
Maryland and West Virginia commission filings note that Potomac Edison and Mon Power cannot seek to recoup merger costs through rates. A proposed settlement with Pennsylvania's commission contains the same statement, Raines said.
Maryland and West Virginia's public utility commissions also set conditions to protect Allegheny jobs in their states.
For at least two years, there can be no net job losses due to "involuntary attrition" as a result of the merger, according to decisions by both commissions.
A proposed settlement with the Pennsylvania commission includes a similar stipulation as well as a five-year commitment to maintain various employment levels in Greensburg and Westmoreland County. Those employment benchmarks decrease from at least 800 jobs the first year to 600 jobs in the fourth and fifth years, according to an Allegheny Energy news release on the settlement.