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Allegheny Power Systems Inc. plans on purchasing Duquesne Light Co. and its parent company DQE Inc. in a cool $4.3 billion dollar deal. Both companies say that this merger will reduce rates for the two companies' combined 2 million customers.
Nevertheless, officials say that the rates will remain separate, and Allegheny Power customers, who have the lowest electric rates in the state, will not see their bills rise to help Duquesne Light customers, whose rates are nearly twice as high (Allegheny Power's rate is $0.07 per kwh, while Duquesne's is about $0.12 per kwh). Apparently, the deal was a direct result of legislation passed last year that will deregulate the state's electricity market beginning in the year 1999.
The merger proposes that the combined network of transmission lines and generating stations will be able to move electricity more efficiently, lowering costs and making it more competitive in a deregulated market. The new company also hopes to save $1 billion in its first 10 years by combining adminstrative functions like purchasing, personnel and other offices.
The amalgamated company would have about 8,500 employees, trimming about 500 of those workers through attrition, early retirement programs and "targeted voluntary reduction programs."
The public utility commissions in Pennsylvania and Maryland, the Federal Energy Regulatory Comission and the U.S. Nuclear Regulatory Commission are some of the several agencies in which the deal is subject to approval. The combined company hopes to win approval within the next 18 months.
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