Shareholder OK starts Duquesne Light sale process
Wednesday, December 06, 2006
By Elwin Green, Pittsburgh Post-Gazette
Shareholders in Duquesne Light's parent company yesterday easily approved the electric utility's sale to a consortium led by a subsidiary of Australia's Macquarie Bank for $1.77 billion.
Now comes the hard part.
The approval by Duquesne Light Holdings shareholders was expected. After all, the $20 per share cash price represents a hefty premium over the $16.44 for which the stock was trading before the transaction was announced in July.
But the deal still needs to run the gantlet of approval by both the state Public Utility Commission (PUC) and the Federal Energy Regulatory Commission (FERC). And while the companies initially said they expected to receive those approvals by the end of the first quarter of 2007, the timeline has been pushed back to June .
That timeline does not include any hearings to receive public input on the transaction. Such hearings typically are scheduled in response to public demand through calls, letters or e-mails to either the PUC or the state's Office of Consumer Advocate.
So far, however, those calls, letters or e-mails have not come, said state consumer advocate Sonny Popowsky.
Still, more than half a dozen parties have filed protests or petitions to intervene with the PUC, including Citizen Power Inc., a nonprofit that advocates on behalf of low-income electricity consumers; the International Brotherhood of Electrical Workers Local 29; the Community Action Association of Pennsylvania, a Harrisburg-based association of agencies throughout the state that serve the poor; the Retail Energy Supply Association, a trade group; and Strategic Energy LLC, an electricity broker.
Community Action's filing is more cautionary than antagonistic, said attorney Joseph L. Vullo. "We have not taken a position in this case that says 'Approve the merger,' nor are we taking a position that says 'The merger application should be denied.' Our role mainly is to ensure that low-income customers' needs are met," he said.
Citizen Power is taking a harder line, arguing that Duquesne Light's 430,000 residential customers are effectively captive, with no real choice in electricity suppliers, and that therefore they are especially susceptible to "cross-subsidization" -- the possibility that Macquarie might use revenue from Duquesne Light to subsidize non-utility operations.
The concern about cross-subsidization is also part of Citizen Power's petition to intervene with FERC. Commission spokeswoman Barbara Connors said that the risk of cross-subsidization is one of four things that FERC looks for when evaluating a potential merger, the other three being its effects on competition in a company's market area, on rates, and on regulation of the company.
As for Duquesne Light Holdings shareholders, 93 percent of the three-fourths of the company's 88.6 million outstanding shares represented at yesterday's meeting at the David L. Lawrence Convention Center voted in favor of the sale.
(Elwin Green can be reached at email@example.com or 412-263-1969.)
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