On December 16, 2010, FERC approved the merger between First Energy Corp. (“FirstEnergy”) and Allegheny Energy, Inc. (“Allegheny”). Through the merger, FirstEnergy will obtain Allegheny in a stock-for-stock exchange where Allegheny stockholders will receive FirstEnergy stock worth about $4.7 billion.
First Energy and Allegheny initially filed for Commission authorization on May 11, 2010, as supplemented per a staff request for additional information on June 21, 2010. FirstEnergy is a holding company which has seven electric utility operating companies that serve customers in Ohio, Pennsylvania, and New Jersey, and one small Village in New York. FirstEnergy’s generation subsidiaries control around 14,800 megawatts of generation capacity. Allegheny is a holding company whose subsidiary operating companies deliver electric service to more than 1.5 million customers.
Allegheny will become a direct wholly-owned subsidiary of FirstEnergy and its stock will no longer be publicly traded. FirstEnergy will increase the size of the Board of Directors after the merger is complete and appoint two current Allegheny Board members to the FirstEnergy Board.
The Commission found that the merger is consistent with the public interest and will not have an adverse effect on competition. The Commission also held the transaction will not result in cross-subsidization of a non-utility associate company, as it is a stock-for-stock merger that will not transfer facilities of any traditional public associate companies of FirstEnergy or Allegheny.
The Commission’s order is available at www.ferc.gov and here.