CITIZEN POWER

Public Policy Research Education and Advocacy

FOR IMMEDIATE RELEASE Contact: David Hughes

May 24,2001 412/421-6072

PUC MERGER AND RATE CAP DECISION WITHOUT MERIT

PITTSBURGH, May 24/PRNewswire/---At the very time when electric competition is in trouble in Pennsylvania, the Public Utility Commission ignored the law and approved-with minimal conditions-a merger between General Public Utilities and FirstEnergy that will further erode electric choice and damage Pennsylvania air quality.

Citizen Power, a utility watchdog organization and a party to the PUC proceeding, argued that the proposed merger is not in the public interest. In its decision today, the Commission also questioned whether the merger is in the public interest, yet gave it conditional approval. Citizen Power does not take much solace in the minimal conditions the Commission has attached. The law requires -- and the Commission's order recognizes -- that utility mergers must provide substantial benefits to the public. “There simply aren't any,” says Harvey Reiter, Citizen Power attorney. “The conditions the Commission attached amount to little more than a requirement that the merged company behave itself,” said Reiter. “Most importantly, these conditions do not even address the concern Citizen Power expressed about the adverse impact on competition that would result from the loss of a supplier due to the merger.”

In addition, despite the complete failure of GPU to justify a requested break in the price caps, the PUC has initiated a “collaborative” in an attempt to reach a settlement on this unprecedented request when, as Commissioner Brownell so correctly asserted, it should have simply denied the rate increase.

“Anyone who reads the record in this case will see that the PUC ignored it,” said David Hughes, executive director of Citizen Power. “FirstEnergy and GPU presented the weakest case for a merger and a rate increase I have ever seen, so one has to wonder how the PUC reached its decision,” Hughes said.

“The PUC is mandated by law to protect the public interest, yet it completely ignored the serious environmental consequences posed by this merger,” continued Hughes. “FirstEnergy is on record saying that it will increase operations at its dirty coal plants to provide electricity to GPU customers. Where does the PUC think that pollution is going?”

“Citizen Power has invested a great deal of resources in this case to prevent further erosion of competition and to protect Pennsylvania’s environment. We intend to continue that effort,” Hughes concluded.

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