Governor Edward G. Rendell today called on the Pennsylvania Public Utility Commission to deny the merger request by FirstEnergy and Allegheny Energy, saying the proposed deal could kill 980 good-paying jobs in southwestern Pennsylvania and harm competition in electricity markets at a time when prices are rising.

The governor directed the Department of Environmental Protection to file a brief on behalf of the commonwealth with the PUC urging the commissioners to deny the merger request.

"This merger would be a great deal for Wall Street and Ohio, but terrible for Pennsylvania’s workers and consumers," said Governor Rendell. "Wall Street’s investors would benefit to the tune of $2 billion, but Pennsylvania could lose nearly 1,000 jobs and our consumers would have fewer choices because there’d be less competition to keep electricity prices low.

The Governor said the driving force behind the merger was clearly articulated by Allegheny Energy President and CEO Paul Evanson during his Sept. 15 presentation at the Barclays Capital 2010 CEO Energy Conference in New York: "We’ll cover over 70 percent of the land mass in the state of Pennsylvania…We’ll be the largest (utility) in the state….We like to be in a dominant position in a state and think we will be that in Pennsylvania."

The Governor said because FirstEnergy and Allegheny Energy are now competitors working to produce and distribute energy at the lowest possible price, a merger would reduce competition and create an electrical behemoth that would further increase the already-rising electric rates paid by families, employers, local governments and schools.

Merger-related job losses would be most severe in southwestern Pennsylvania. If the merger is permitted, the new company will be headquartered in Akron, Ohio, threatening well-paying jobs at Allegheny Energy’s Greensburg, PA, headquarters.

In addition to increasing consumer costs and adding to unemployment, a review of the merger application shows that it lacks any positive environmental effects, energy efficiency incentives or increases in renewable energy – all of which are needed to help Pennsylvania grow its economy, the Governor added.

FirstEnergy Corp. and Allegheny Energy, in turn, issued the following statement in response to Pennsylvania Governor Ed Rendell's opposition to the companies' proposed merger:

"We respectfully disagree with Governor Rendell's position on our proposed merger.

"The merger will create a stronger company, better positioned to deliver significant immediate and long-term benefits to the Commonwealth of Pennsylvania, including operating efficiencies that would result in better service reliability and prices for customers.

"It is noteworthy that several groups concerned with jobs and economic growth in Pennsylvania have publicly supported the merger, including the International Brotherhood of Electrical Workers (IBEW), the Utility Workers Union of America (UWUA) and economic development and chambers of commerce groups, such as the Butler, Pa. County Economic Development Corp., Greater Johnstown-Cambria County Chamber of Commerce and the PA Economic Development Association.

"The stronger company created by this merger provides the best opportunity for employment and economic growth in Pennsylvania. FirstEnergy has made certain commitments related to the utility workforce in Pennsylvania. The company also has delayed hiring in order to accommodate Allegheny Energy employees, and will look for ways to provide additional career opportunities.

"In its merger application, FirstEnergy has committed to locate a regional headquarters in Greensburg, Pa., at the current headquarters building of Allegheny Energy. And, the company plans to work with local community colleges to establish a fourth Power Systems Institute (PSI) program in Pennsylvania. PSI is FirstEnergy's award-winning partnership to educate and train future utility workers.

"Previous FirstEnergy mergers – including the 2001 transaction with another Pennsylvania company, GPU, Inc. – resulted in enhanced customer service reliability, improved safety and increased community support.

"While we are disappointed that Governor Rendell does not recognize the many benefits of the FirstEnergy and Allegheny Energy merger, we will continue to work through the process to secure the needed regulatory approvals. The process remains on track. We are confident that the Pennsylvania Public Utility Commission (PaPUC) will look at the record of the case and base a decision on the merits. The merger already has been overwhelmingly supported by both companies' shareholders, and has been approved by the Virginia State Corporation Commission. We hope to receive support from the remaining commissions, including the PaPUC, so that the merger can be completed in the first half of 2011."