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Pa. approves Allegheny Energy/DQE merger

July 24, 1998

By LAURA ERNDE

Staff Writer

Allegheny Energy customers in the Tri-State area are one step closer to a rate reduction now that the Pennsylvania Public Utility Commission has approved the company's merger with DQE Inc.

The $2.6 billion merger still needs to be approved by the Federal Energy Regulatory Commission, the U.S. Department of Justice, the Federal Trade Commission and the Securities and Exchange Commission.

Hagerstown-based Allegheny Energy is hoping to get the go-ahead by the end of October to start passing on $1 billion in savings over 10 years, said Michael P. Morrell, senior vice president and chief financial officer.

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The average Allegheny Power customer in Maryland would see a $1.04 cut in monthly electric bills.

Average bills for the company's customers in Franklin and Fulton counties in Pennsylvania would drop 70 cents a month.

The merger was heavily scrutinized by Pennsylvania regulators, who were concerned about a power monopoly, Morrell said.

To satisfy regulators, Allegheny Energy agreed to sell power generated at DQE's plant in Cheswick, Pa., to help dilute the strength of the merged company in the marketplace.

It also agreed to continue its efforts to join the Midwest Independent System Operator, a compact of regional utilities that encourages competition in the industry.

In addition to the rate reductions, the merger would eliminate an estimated 500 jobs, mostly through attrition, company officials have said.

Allegheny Energy has 1.4 million customers in Maryland, Ohio, Pennsylvania, Virginia and West Virginia.

Pittsburgh-based DQE, which does business as Duquesne Light, has 580,000 customers, all in Pennsylvania.

The new Allegheny Energy would be the 10th-largest investor-owned utility in the country based on total kilowatt-hour sales.

The merger was approved in March by the Maryland Public Service Commission.

Earlier this month, Allegheny Energy reached a settlement with Pittsburgh Mayor Tom Murphy.

In exchange for the city's support of the merger, the company will contribute $4 million a year for four years to Pittsburgh's economic development fund.

The proposed merger was announced in April 1997.

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