The proposed merger between FirstEnergy Corp. and Allegheny Energy Inc. now has only to secure approval from Pennsylvania regulators to move forward after the Maryland Public Service Commission gave the deal its OK.
The commission approved the merger of the utilities Tuesday night, but attached a list of conditions that need to be met. The conditions include requiring the merged company to make a $6.5 million lump sum payment — equivalent to $29 for each Maryland customer — as part of a rate relief refund. Maryland regulators are also requiring FirstEnergy, as the new company will be called, to not cut the work force for two years after the merger.
In addition, the commission is requiring the new company to locate a regional headquarters in Maryland and assist in the development of a renewable energy project in the state capable of generating 13,000 megawatts.
The order comes after the companies hashed out merger details with the PSC since the application was submitted on May 27, 2010.
“This largely reflects the settlement agreement already reached,” said Allegheny Energy spokesman David Neuroh. “We’re going to take a look at the order and then move forward from there.”
Allegheny Energy is incorporated in Maryland but has its headquarters in Greensburg, Pa. The company has three subsidiaries: West Penn Power Co.; Monongahela Power Co.; and Potomac Edison, which operates in Maryland and West Virginia. The company has about 250,000 customers in Maryland.
The commission gave the companies until Feb. 17 to review the order and respond whether the merger will move forward. Allegheny Energy and FirstEnergy said Wednesday they had no immediate comment on the PSC order.
“We’re taking a look at the order now and we’ll respond within the 30-day period,” said FirstEnergy spokeswoman Ellen Raines said.
Allegheny had 2009 revenues of $3.4 billion, according to the PSC order. The company’s subsidiaries own 9,756 megawatts of electric generating capability.
FirstEnergy is based in Akron, Ohio, and reported 2009 revenue of $13 billion. The company has approximately 4.5 million customers in Ohio, Pennsylvania, New Jersey and New York. Through its subsidiaries, FirstEnergy controls 14,000 megawatts of electric generation.
The merger was announced last February. The companies have approvals from the Federal Energy Regulatory Commission, the Virginia State Corporation Commission and the Public Service Commission of West Virginia, and the deal completed the U.S. Department of Justice review process. Shareholders from both companies also voted in favor of the merger.
Some of the conditions of the FirstEnergy-Allegheny merger imposed by the Maryland Public Service Commission:
– Within three months of merger, pay lump sum of $6.5 million, or $29 per Potomac Edison customer, for rate relief.
– Contribute $600,000 to the Electric Universal Service Program.
– Apply $750,000 against costs already incurred for Potomac Edison’s EmPower Maryland programs.
– Locate a regional headquarters in Maryland, with a regional president.
– Assist in developing a Tier 1 renewable energy project in Maryland capable of generating 13,000 megawatts. All applicable permits must be applied for within two years of the merger’s consummation.
– No net job losses as a result of the merger for two years.
– Maintain charitable contributions at the pre-merger level in Maryland for three years.