NYPSC Gives Green Light to ConEd-O&R Merger
The New York State Public Service Commission (NYPSC) last week unanimously approved the merger of Consolidated Edison of New York and Orange and Rockland Utilities. NYPSC Chairman Maureen O. Helmer said Consumers will benefit from the strength of the companies' combined management and from merger-related savings over the next five years. "The merger has achieved broad public support, and after thorough review and analysis by staff and interested parties, the commission concludes it serves the public interest."
Gas customers of Consolidated Edison (ConEd) will realize about $10 million in operational cost savings over the first five years as a result of the merger. The merger will produce about $8.7 million of Orange and Rockland gas operational savings as well as additional gas commodity cost savings. Consolidated Edison electric customers will see savings as well. Total net savings from the merger over the next five years will be shared with 75% going to ratepayers and 25% allotted to shareholders.
Under terms of the merger, Consolidated Edison Inc., the parent company of ConEd, will purchase Orange and Rockland's stock for $58.50/share and Orange and Rockland will become a wholly-owned subsidiary. Both ConEd and Orange and Rockland will continue to operate under their own names.
In May last year ConEd announced its plan to pay a premium of 38% over the current stock value for neighboring Orange &Rockland and said it expected the deal to generate $500 million in cost savings over 10 years (see NGI May 18, 1998).
In November Southern Energy Inc., a unit of Southern Co., said it would buy 1,776 MW of gas, oil, coal, and hydropower generation from Orange and Rockland and ConEd. For about $480 million (see NGI Nov. 30, 1998). "With the close proximity of the generation to New York City, this acquisition is a big step forward in the expansion of our asset base in the Northeast United States," Tom Boren, Southern Energy president, said at the time. Orange and Rockland and ConEd divested the generation in anticipation of a deregulated electricity marketplace.
The companies have already received merger approvals from FERC and Pennsylvania and New Jersey regulators.
Joe Fisher, Houston
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