Monday, January 16, 2006
Ind. Econ. Dev. - Proposed Duke/Cinergy merger sees some opposition
Lisa Cornwell of the AP has this story today in the Cincinnat Enquirer. Some quotes:
A proposed $9 billion takeover of Cincinnati-based Cinergy Corp. by a North Carolina power company is being criticized by some consumer advocates, disrupting what had been a smooth approval process.Readers with long memories may recall that it was the opposition of industrial consumers that ultimately led to the end of then-PSI's Marble Hill nuclear plant project in the early 1980s.
The merger of Cinergy with Charlotte, N.C.-based Duke Energy Corp. would create a company with more than $70 billion in assets and 5.4 million retail customers, making it one of the nation's five largest power companies.
The deal sailed through South Carolina's and Kentucky's regulatory processes, winning approval in November.
But North Carolina and Indiana consumer groups remain opposed, and the Ohio Consumer's Counsel is trying to get a rehearing.
Ohio's commission signed off on the merger last month.
Critics say there is a lack of adequate consumer protection and inequitable benefits for rate payers in the deal.
Their concerns mirror those of consumer advocates nationally as utilities continue consolidation efforts in the wake of last summer's repeal of a decades-old federal law.
Utilities and the Bush administration pushed for repeal of the law that had confined utilities to regional operations.
"We don't think these large mergers are good for consumers," said Tyson Slocum, an energy program director at Public Citizen, a Washington D.C.-based watchdog group.
"They put more utilities in fewer and fewer hands, increasing the likelihood of complex financial structures that will be less transparent and undermining the ability of state regulators to protect consumers."
Four large utility mergers proposed in the last year, including Duke-Cinergy, have encountered few hurdles so far, said Charles Fishman, analyst with A.G. Edwards & Sons Inc. * * *
The Citizens Action Coalition of Indiana signed off on Cinergy's 1994 acquisition of Indiana's PSI Energy Inc. because it made sense and meant consumer savings, but opposes the current deal, said Mike Mullett, an attorney for the coalition.
"Indiana customers got about 85 percent of the savings in 1994, but here they are only getting 42 percent," Mullett said. "Rate payers are getting the short, dirty end of the stick."
Another sore point for the Indiana coalition is the risk of higher rates for consumers from any losses that the combined company might incur through any of its non-regulated energy subsidiaries or other types of business ventures. * * *
Industrial consumer groups in North Carolina oppose the proposed merger, and that state's regulatory commission took the unusual step of holding oral arguments last month. A decision is pending.
Posted by Marcia Oddi on January 16, 2006 03:10 PM
Posted to Indiana economic development