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Ohio Schools Want Review of Columbia Gas, NiSource Merger

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 is finalized.

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 states.

Carolyn Davis, Houston

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