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Allegheny to market electricity nationwide

January 08, 2001

Allegheny to market electricity nationwide



By LAURA ERNDE / Staff Writer


Allegheny Energy Inc. of Hagerstown announced Monday the purchase of company that will help propel the Hagerstown-based company into the national energy market.

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Allegheny Energy Supply, LLC, the company's unregulated power generating subsidiary, will acquire Global Energy Markets, Merrill Lynch's energy commodity marketing and trading unit, at a cost of $490 million plus a two percent equity interest in Allegheny Energy Supply.

Global Energy Markets, one of the top 20 electricity traders in the nation in terms of volume, will help Allegheny sell its power on the wholesale market.

When combined with Allegheny's trades, the volume is expected to make Allegheny Energy Supply one of the top 10 power marketers in the country.

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Deregulation has allowed Allegheny Energy Supply to sell power on the wholesale market, but most sales have taken place within the local region, said Alan J. Noia, chairman, president and chief executive officer of Allegheny Energy.

The acquisition will allow Allegheny to sell nationwide, although its headquarters will remain in Hagerstown.

"We still view ourselves as a member of the local community and this will make us an even stronger company," Noia said.

Global Energy Markets has the specialized skill and market presence necessary for Allegheny to capitalize on the market, Noia said.

The acquisition will help Allegheny meet its goal to increase earnings by more than 10 percent per year through in-house marketing and Merrill Lynch's agreement to refer its clients with energy trading needs to Allegheny Energy Supply.

"Our generating fleet is one of our most valuable assets, and this acquisition is a significant step toward unlocking its full value. We are committed to becoming a national energy merchant, and the combination of our powerful generating fleet with GEM's experience will drive growth and shareholder value," Noia said.

The purchase, which must be approved by the Federal Energy Regulatory Commission and the Federal Trade Commission, is expected to be complete in about two months.

Global Energy Markets will be able to conduct business immediately and will continue to be based in New York City.

Daniel L. Gordon, head of Global Energy Markets, is the newly appointed president of Allegheny Energy Supply's Trading Division. In his new position, Gordon will have responsibility for all commodity risk management activities within Allegheny Energy Supply.

"My team and I look forward to becoming a part of the Allegheny Energy family. This transaction is a unique opportunity to combine a disciplined and established trading and risk-management enterprise with one of the best power generation portfolios in North America," Gordon said in a prepared statement.

With its recently announced acquisitions and expansion plans, Allegheny Energy Supply will have generating capacity of nearly 13,000 megawatts, with plants located throughout the United States.

Allegheny Energy also owns Allegheny Power, which distributes electricity to about 3 million customers in parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia.

A third subsidiary of Allegheny Energy is Allegheny Ventures, which invests in and develops telecommunications and energy-related projects.

Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 44 countries and total client assets of about $1.8 trillion. As an investment bank, it is the top global underwriter and market maker of debt and equity securities and a leading strategic adviser to corporations, governments, institutions and individuals worldwide.

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