After a four-year wait, Cincinnati Gas &amp Electric Co. and PSIResources finally received unconditional approval of their mergerinto Cinergy Corp. from the Securities and Exchange Commission. Afinal decision on the merger was held up by potential Congressionalaction on the Public Utility Holding Company Act.

The gas and electric operations of the two companies are notintegrated under PUHCA, and the companies risked having to divestthe gas distribution operations of Cincinnati Gas &amp Electric Co. But the SEC put off a decision on the matter because of expectedchanges or repeal of PUHCA by Congress. Legislation, however, wasnever passed.

Cinergy filed an updated merger study with the SEC in Februaryof this year showing that divestiture of gas distribution wouldresult in a $52 million increase in operating costs, attributableto duplication of meter reading, customer service andadministrative personnel and operations. That was enough toconvince the SEC the merger was in the public interest.

“Consolidation and convergence in the energy industry should notbe artificially restrained by regulations designed to addressissues of a bygone era,” said Cinergy CEO James E. Rogers. “The SECdemonstrated that logic will prevail in the marketplace.”

“We were never really that worried about it,” said a Cinergyspokesman. “I think we felt pretty confident that we could provedivestiture would lead to increased costs.” The gas distributionunit represents only about 8% of corporate revenues.

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