Rendell opposing Allegheny Energy merger

Gov. Ed Rendell has stepped in to block the merger of Greensburg electric utility Allegheny Energy with Akron, Ohio-based FirstEnergy by directing the Department of Environmental Protection to file a brief with the Public Utility Commission opposing the deal.

"This merger would be a great deal for Wall Street and Ohio, but terrible for Pennsylvania's workers and consumers," Mr. Rendell said in a statement released Tuesday morning.

The governor said the merger would reduce electricity competition and increase electric rates, and that it could cost the state nearly 1,000 jobs.

PUC spokeswoman Jennifer R. Kocher said that since the Department of Environmental Protection was already a party to the merger case, having filed to be an intervenor on June 14, the agency "more than likely" would have filed a brief even without the governor's specific direction.

According to the schedule that has been established for the case, she said, administrative law judges should make their recommendation on whether or not to approve the merger by the end of the year, with the PUC's decision likely to come early next year, after Mr. Rendell has left office.

The PUC began evidentiary hearings on the case Tuesday in Harrisburg. The hearings are expected to continue the rest of the week.

Allegheny Energy and FirstEnergy responded to Mr. Rendell's announcement with a statement noting that "several groups concerned with jobs and economic growth in Pennsylvania have publicly supported the merger," including the International Brotherhood of Electrical Workers and the PA Economic Development Association.

The release also said FirstEnergy "has delayed hiring in order to accommodate Allegheny Energy employees, and will look for ways to provide additional career opportunities."

David Hughes, executive director of Citizen Power, a public policy research organization, was not impressed.

Citizen Power is also an intervenor in the case, and Mr. Hughes said the companies' response, like the merger proposal itself, falls short of providing the assurances needed regarding competition, environmental concerns and jobs.

"'Finding other career opportunities' sounds like you're going to lay people off and try to find other jobs for them," he said.

Noting that merger proposals typically result in PUC-approved settlements between the companies involved and intervenors, he said that in the negotiations now in progress, "parties have made proposals, but the companies haven't been very cooperative."

"It's hard to measure the governor's statement in terms of impact" on the negotiations, he said. "But in terms of whether he's correct or not, we think he's right on target."