Press Release

    Harrisburg, Pa. July 29 ¾ The Chairman of the state Public Utility Commission (PUC) today said he is surprised and dismayed by DQE’s decision to pull out of its $4.3 billion merger with Allegheny Energy, and cautioned against using the Commission as an excuse to get out of the deal.

    "To suggest that this decision was made based on PUC actions is incorrect," PUC Chairman John Quain said in response to DQE’s claim that recent PUC decisions have thwarted the merger.

    The Commission voted 5-0 on April 30 to approve the deal after concluding the merger would provide significant benefits to the companies, their shareholders, employees and customers. The majority of public input testimony supported approval of the merger, Quain noted. On July 23, the PUC approved an amended merger plan to further alleviate market power concerns.

    The proposed merger was expected to result in substantial savings in generation, transmission and distribution services. The amount of generation-related merger savings for Allegheny is estimated at $70.6 million and $152.28 million for Duquesne. The distribution-related merger savings are estimated at $9.1 million for Allegheny and $15.8 million for Duquesne.

    "The CEO of Duquesne answers to his shareholders," Quain added. "The Commission has a statutory responsibility to protect Pennsylvania’s ratepayers and balance their interests with those of the utility.

    "The Electric Competition law requires that the Commission determine a ‘just and reasonable’ amount of stranded costs each utility may recover," he said. "Furthermore, the law requires that we evaluate mergers to protect against the unlawful exercise of market power. This is to ensure a properly functioning and workable competitive retail electricity market. The Commission has successfully accomplished both objectives in its restructuring and merger decisions."

    The PUC approved DQE’s restructuring order on May 21, allowing the utility to recover $1.33 billion in stranded costs over seven years. The company had requested $1.9 billion. The PUC also approved Allegheny Power’s restructuring order on May 21, granting the utility $524 million in stranded costs over seven years. The utility had requested approximately $1.5 billion.

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