Rendell Opposes FirstEnergy-Allegheny Merger, Cites Competitive Harm

Pennsylvania Governor Edward Rendell yesterday called on the Pennsylvania Public Utility Commission to deny the merger application of FirstEnergy Corp. and Allegheny Energy, warning that the proposed transaction could harm competition in electricity markets at a time when prices are rising, while also eliminating jobs in Pennsylvania.

"This merger would be a great deal for Wall Street and Ohio, but terrible for Pennsylvania's workers and consumers," said Rendell. "Wall Street's investors would benefit to the tune of $2 billion, but Pennsylvania could lose nearly 1,000 jobs and our consumers would have fewer choices because there'd be less competition to keep electricity prices low.”

A statement from the Governor's office said that the, "driving force behind the merger was clearly articulated by Allegheny Energy President and CEO Paul Evanson during his Sept. 15 presentation at the Barclays Capital 2010 CEO Energy Conference in New York."

In that statement, first reported by Matters, Evanson told analysts that, upon covering 70% of Pennsylvania's geography after the merger, "we'll be the largest company in the state, and I always think it's good to be a large player in a state. We were, as you know, a trivial player in Virginia and we got treated badly. If you're Dominion, you love the Commonwealth of Virginia, but if you're Allegheny, you didn't."

"We like to be in a dominant position in a state, and I think we will be that in Pennsylvania," Evanson added during the investor conference.

Rendell directed the Department of Environmental Protection to file a brief on behalf of the commonwealth with the PUC urging the commissioners to deny the merger request. The DEP had filed testimony opposing the merger raising concern over the companies' environmental record, but such testimony was stricken by an ALJ as outside the scope of the proceeding. DEP has petitioned for interlocutory review of that decision.