Allegheny Energy jobs to be preserved in Westmoreland

Tuesday, October 26, 2010

FirstEnergy Corp. has made a five-year commitment to keep 600 or more jobs in Westmoreland County as part of its proposed merger with Greensburg-based Allegheny Energy.

A settlement was reached that will ensure the Greensburg headquarters will remain a Pennsylvania headquarters after the merger, Sen. Kim Ward and others involved in negotiations said Monday. The agreement signed by both companies and 18 parties who objected to the merger establishes a minimum requirement of jobs in Westmoreland County over the next five years.

The retention of jobs in Western Pennsylvania was a major concern at public hearings held by the PUC in Greensburg in August on FirstEnergy Inc.'s proposed $8.5 billion acquisition of Allegheny Energy Inc., which was announced in February.

When Akron-based FirstEnergy announced its bid to acquire Allegheny Energy, concerns were raised over the impact on jobs here and the electricity rates that consumers will pay to the combined company that would become the state's largest electric utility.

Jobs based at Allegheny Energy's Greensburg headquarters number 845, according to Allegheny Energy officials.

Under the proposed settlement, FirstEnergy has agreed to maintain a minimum of 71 percent of the jobs for the five-year period, said Ward, a Hempfield Republican.

Ward said it breaks down to 800 jobs for a period of 12 months after the merger is approved by the PUC. In year two, a minimum of 675 jobs must be retained. A total of 650 would remain by the third year and 600 in the fourth and fifth years.

Ward said the jobs must remain in Westmoreland County under the agreement. The settlement is separate from an agreement involving the utility line workers' union, which made its own arrangement with First Energy.

The agreement still must be approved by the Pennsylvania Public Utility Commission, said FirstEnergy's spokeswoman Ellen Raines. The commission is not expected to vote on the merger until 2011.

"With the agreement signed off to by FirstEnergy, Allegheny Energy Inc. along with 18 parties to the merger, this is a very encouraging step forward on so many issues raised concerning this merger," Raines said.

FirstEnergy CEO Anthony J. Alexander praised the agreement.

"We are pleased to have the support of the majority of parties to our merger case. This settlement builds on the significant commitments we've made to the commonwealth and provides additional benefits to employees, customers and the competitive marketplace," Alexander said.

Allegheny Energy CEO Paul J. Evanson concurred. "This agreement resolves a wide range of issues and should ensure we have a strong presence in our Pennsylvania communities for many years to come," Evanson said.

In addition to a five-year commitment to maintain jobs, the agreement provides:

• Nearly $11 million in customer credits for Allegheny Power residential customers over a three-year period.

• A distribution rate freeze through Oct. 1, 2012, for customers of FirstEnergy's current Pennsylvania electric companies: Penn Power, which serves areas north of Pittsburgh, plus Metropolitan Edison and Pennsylvania Electric.

• Outreach to Allegheny Power customers including the establishment of a retail choice ombudsman to promote and encourage customer choice and shopping.

• Reliability improvements aimed at reducing the number and duration of outages for Allegheny Power customers.

• $2 million for renewable energy development and conservation programs.

David Hughes, executive director of Squirrel Hill-based Citizen Power, a consumer advocacy group, remains disappointed with the planned merger.

"Just because some parties including the unions and some environmental groups got some gifts and settled doesn't mean this merger is all good and wonderful. We still plan to litigate this," Hughes said.

He said the advocacy group's objections to the merger remain unresolved, and the issues could hurt consumers in the long term.

Hughes said Citizen's chief concern is the creation of a "mega-utility and the anti-competitiveness it will create." He said there are some outstanding environmental issues regarding Allegheny's coal-generation facilities that were not addressed in the settlement.

Ward said jobs are her main concern. She noted the agreement calls for job retraining support for any employee displaced during the next five years.

"This is a long-term win for Westmoreland County, but it does come at a price, and I hope to work even harder to ensure that those jobs lost can be found elsewhere in the community," Ward said.

Allegheny Power, the power distribution unit of Allegheny Energy, serves about 700,000 customers in Southwest Pennsylvania.