Ohio Schools Want Review of Columbia Gas, NiSource Merger
Less than one day after the Public Utilities Commission of Ohio
(PUCO) threw its support behind the $6 billion NiSource-Columbia
Energy Group merger, three groups of Ohio schools urged the
commission to make a full review of the proposal. Last Tuesday,
PUCO authorized a letter to the U.S. Securities and Exchange
Commission (SEC) that stated the proposed merger would have no
impact on its ability to protect the interests of Columbia Gas of
Ohio ratepayers. However, the schools are not as confident.
The Ohio Schools Council, Bay Area Council and the Lake Erie
Council, which comprise 115 school districts in northern Ohio,
petitioned PUCO, requesting it investigate NiSource's record of
service complaints from customers, as well as its financial
condition. The three groups also want Columbia to open its merger
filing to public review.
"This merger has the potential to negatively impact tax revenues
for Ohio," said Joe Lesak, executive secretary of the Ohio Schools
Council. "Unless this proposed merger is carefully and fully
reviewed by the PUCO, we are concerned that the assumption by
NiSource of over $8 billion of debt from Columbia will force the
company to cut jobs and raise rates." Lesak also said that with
NiSource as the new out-of-state owner, the schools need a
commitment that the company will work with them because they are
"particularly large users of utility services."
The schools groups also want PUCO to review why none of the
estimated annual savings from the merger, estimated to be more than
$100 million, was going to be returned to Ohio ratepayers, which
include the schools.
On Tuesday, PUCO said it would continue its jurisdiction over
the regulated activities of Columbia Gas of Ohio following the
merger. Columbia Gas of Ohio is a natural gas distribution
subsidiary of Columbia Energy Group, and is Ohio's largest gas
company, serving nearly 1.3 million customers.
With PUCO's support, the merger moves one step closer to an
expected completion later this year. Shareholders still must cast
their vote, and several state public utility commissions and
federal agencies will weigh in with their decisions before the deal
In a joint statement, NiSource's CEO Gary L. Neale and Columbia
Energy Group CEO Oliver G. Richard III said that "consumer service
and value delivery have and will continue to be major goals of the
Columbia Gas distribution business." They pointed to what they
called a "record of excellence in customer service."
The merger was announced in late February, and a joint
application was filed in April (see NGI April 13). If approved, the
new company will serve more than 4.1 million customers in nine
Carolyn Davis, Houston
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