ML20134A962
| ML20134A962 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley, Davis Besse, Perry |
| Issue date: | 01/22/1997 |
| From: | Hopkins J NRC (Affiliation Not Assigned) |
| To: | NRC (Affiliation Not Assigned) |
| References | |
| NUDOCS 9701290194 | |
| Download: ML20134A962 (23) | |
Text
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4 January 22, 1997 LICENSEE: CLEVELAND ELECTRIC ILLUMINATING COMPANY FACILITY: PERRY NUCLEAR POWER PLANT, UNIT 1
SUMMARY
OF MEETING HELD ON DECEMBER 4, 1996, TO DISCUSS A PR
SUBJECT:
MERGER BETWEEN CENTERIOR ENERGY CORP. AND OHIO EDIS0 On December 4,1996, NRC staff members met at Rockville, Maryland, with representatives of Centerior Energy Corporation and Ohio Edison Company to A list of attendees is discuss a proposed merger of the two companies.
included as Enclosure 1.
General information concerning the proposed merger was discussed with the NR The licensees representatives stated that, at least for Perry and Davis-Besse,the plant operators and owners would remain the same and no staff.
license amendments would be required, and they thought that tha true for the Beaver Valley plants.
10 CFR 50.80 transfer consent would be submitted for Per Information Beaver Valley.
no changes to antitrust requirements as a result of the merger.
presented to the NRC staff at the meeting is included as Enclosure 2.
Original signed by:
Jon B. Hopkins, Sr. Project Manager Project Directorate III-3 Division of Reactor Projects III/IV Office of Nuclear Reactor Regulation Docket Nos. 50-440, 346, 334, 412
Enclosures:
As stated cc w/enclos:
See next page DISTRIBUTION:
DOCUMENT NAME:
G:\\ PERRY \\ MERGER.MTS
- E* = Copy with attachment / enclosure "C" = Copy without attachment / enclosure To receive a copy of ttne document, indicate in the boa:
"N* = No copy OFFICE PDill-3:LA PDill-3:PM NAME E8arnhill P/P JHopkins
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DATE 01/22/97 01/;" J97 6 OFFICIAL RECORD COPY 9701290194 970122 a4e RE Egg gg PR
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UNITED STATES g
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- '4 4,..,o January 22, 1997 4
LICENSEE: CLEVELAND ELECTRIC ILLUMINATING COMPANY FACILITY: PERRY NUCLEAR POWER PLANT, UNIT 1
SUBJECT:
SUMMARY
OF MEETING HELD ON DECEMBER 4, 1996, TO DISCUSS A PROPOSED MERGER BETWEEN CENTERIOR ENERGY CORP. AND OHIO EDIS0N C0.
On December 4, 1996, NRC staff members met at Rockville, Maryland, with representatives of Centerior Energy Corporation and Ohio Edison Company to discuss a proposed merger of the two companies. A list of attendees is included as Enclosure 1.
General information concerning the proposed merger was discussed with the NRC staff.
The licensees representatives stated that, at least for Perry and Davis-Besse,the plant operators and owners would remain the same and no license amendments would be required, and they thought that that would also be true for the Beaver Valley plants. They stated that separate applications for 10 CFR 50.80 transfer consent would be submitted for Perry, Davis-Besse, and 1
Beaver Valley.
The licensees representatives also stated that there would be no changes to antitrust requirements as a result of the merger.
Information presented to the NRC staff at the meeting is included as Enclosure 2.
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Jon 3. Hopkins, Sr. Project Manager Projact Directorate III-3 4
Division of Reactor Projects III/IV Offi:e of Nuclear Reactor Regulation i
Docket Nos. 50-440, 346, 334, 412
Enclosures:
As stated cc w/enclos:
See next page I
.o January 22, 1997 LICENSEE: CLEVELAND ELECTRIC ILLUMINATING COMPANY e
3 f ;', %
9 FACILITY: PERRY NUCLEAR POWER PLANT, UNIT 1 0 DISCUSS A PROPOSED
SUMMARY
OF MEETING HELD ON DECEMBER 4,,1996, MERGER BETWEEN CENTERIOR ENERGY CORP.!AND OHIO, EDISON-C0.
SUBJECT:
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OnDecember4,1996,NRCstaffmembersmet*at"Rockville,.Marylahd representativesofCenteriorEnergyCorporationlandOhioEdisonicompanyto'y M'
discuss a proposed merger of the two companies.( A list'of. attendees is
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included as Enclosure 1.
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- t.a. -, s. y. u,,. e General information concerning the proposed < merger was discussed with,the
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The licensees representatives stated that, at least forePerry'andL i;n O
Davis-Besse,the plant operators and owners would remain the same and>no staff.
license amendments would be required, and they thought that tha true for the Beaver Valley plants.
10 CFR 50.80 transfer consent would be submitted,for Perr Information.T Beaver Valley.
no changes to antitrust requirements as a resul.t of the merger.
presented to the NRC staff at the meeting is included as Enclosure 2.
Original signed by:
JonB.Hopkins,Sr.Pr6je'ctManager Project Directorate III-3 Division of Reactor Projects III/IV Office of Nuclear Reactor. Regulation Docket Nos. 50-440, 346, 334, 412
Enclosures:
As stated cc w/enclos:
See next page DISTRIBUTION:
DOCUMENT NAME: -G:\\ PERRY \\ MERGER.MTS "E" = Copy with ettechment/ enclosure "C" = Copy without ettschment/ enclosure To receive a copy of this document, Indicate in the bos:
'N' = No copy OFFICE PDill 3:LA PDill-3:PM NAME EBarnhill F/V JHopkins
//,
DATE 01/22/97 01/M 97 /7 OFFICIAL RECORD COPY
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i Duquesne Light Company Beaver Valley Power Station-Units 1 & 2
- cc:
Jay E. Silberg, Esquire Bureau of Radiation Protection Shaw, Pittman, Potts & Trowbridge Pennsylvania Department of 2300 N Street, NW.
Environmental Resources Washington, DC'20037 ATTN:
R. Barkanic Post Office Box 2063 R. K. Brosi. Manager Harrisburg, PA 17120 Nuclear Safety Department (BV-A)
Duquesne Light Company Beaver Valley Power Station Mayor of the Borrough of PO Box 4
.Shippingport Shippingport, PA 15077 Post Office Box 3 Shippingport, PA 15077 Commissioner Roy M. Smith West Virginia Department of Labor Regional Administrator, Region I Building 3, Room 319 U.S. Nuclear Regulatory Commission Capitol Complex 475 Allendale Road Charleston, WVA 25305 King of Prussia, PA 19406 John D. Borrows Resident Inspector Director, Utilities Department U.S. Nuclear Regulatory Commission Public Utilities Commission Post Office Box 298 180 East Broad Street Shippingport, PA 15077 Col'imbus, OH 43266-0573 Director, Pennsylvania Emergency Duquesne Light Company Management Agency Beaver Valley Power Station Post Office Box 3321 PO Box 4 Harrisburg, PA 17105-3321 Shippingport, PA 15077 ATTN:
S. C. Jain, Vice President Ohio EPA-DERR Nuclear Services (BV-A)
ATTN:
Zack A. Clayton Post Office Box 1049 J. E. Cross Columbus, OH 43266-0149 President-Generation Group Duquesne Light Company Dr. Judith Johnsrud Post Office Box 4 National Energy Committee Shippingport, PA 15077 Sierra Club 433 Orlando Avenue State College, PA 16803 i
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Perry Nuclear Power Plant Unit Nos. I and 2 Centerior Service Company 1
cc:
Mr. James D. Kloosterman Mr. Richard D. Brandt, Plant Manager Regulatory Affairs Manager Cleveland Electric Illuminating Co.
Cleveland Electric Illuminating Co.
Perry Nuclear Power Plant Perry Nuclear Power Plant P.O. Box 97, SB306 P.O. Box 97, A210 Perry, Ohio 44081 Perry, Ohio 44081 Mr. James W. Harris, Director Jay E. Silberg, Esq.
Division of Power Generation Shaw, Pitt'aan, Potts & Trowbridge Ohio Dept. of Industrial Relations 2300 N direet, N.W.
P.O. Box 825 Washington, D.C.
20037 Columbus, Ohio 43216 Ms. Mary E. O'Reilly Centerior Energy Corporation Mayor, Village of Perry 300 Madison Avenue 4203 Harper Street Toledo, Ohio 43652 Perry, Ohio 44081 Resident Inspector's Office 4
U.S. Nuclear Regulatory Commission Mayor, Village of North Perry Parmly at Center Road North Perry Village Hall Perry, Ohio 44081 4778 Lockwood Road North Perry Village, Ohio 44081 Regional Administrator U.S. NRC, Region III Attorney General 801 Warrenville Road Department of Attorney General Lisle, Illinois 60532 4531 30 East Broad Street Columbus, Ohio 43216 t
1 Lake County Prosecutor Lake County Administration Bldg.
Radiological Health Program 105 Main Street Ohio Department of Health Painesville, Ohio 44077 P. 0 Box 118 Columbus, Ohio 43266-0118 Ms. Sue Hiatt OCRE Interim Representative Ohio Environmental Protection Agency 8275 Munson DERR--Compliance Unit Memtor, Ohio 44060 ATTN: Mr. Zack A. Clayton P.O. Box 1049 Terry J. Lodge, Esq.
Columbus, Ohio 43266-0149 618 N. Michigan Street, Suite 105 Toledo, Ohio 43624 Chairman Perry Township Board of Trustees Ashtabula County Prosecutor 3750 Center Rd., Box 65 25 West Jefferson Street Perry, Ohio 44081 Jefferson, Ghic 44047 i
Mr. Lew W. Myers Vice President - Nuclear, Perry State of Ohio Centerior Service Company Public Utilities Commission P.O. Box 97, A200 East Broad Street Perry, Ohio 44081 Columbus, Ohio 43266-0573 i
i James R. Williams, Chief of Staff Ohio Emergency Management Agency
.2855 West Dublin Granville Road Columbus, Ohio 43235-2206
4 Davis-Besse Nuclear Power Station Toledo Edison Company Unit No. I cc:
Mary E. O'Reilly Robert E. Owen, Chief Centerior. Energy Corporation Bureau of Radiological Health 300 Madison Avenue Service Toledo, Ohio 43652 Ohio Department of Health P. O. Box 118 Columbus, Ohio 43266-0118 Mr. James L. Freels Attorney General Manager - Regulatory Affairs Department of Attorney Toledo Edison Company General Davis-Besse Nuclear Power Station 30 East Broad Street 5501 North State - Route 2 Columbus, Ohio 43216 Oak Harbor, Ohio 43449-9760 Mr. James W. Harris, Director Gerald Charnoff, Esq.
Division of Power Generation Shaw, Pittman, Potts Ohio Department of Industrial
-& Trowbridge Regulations 2300 N Street, N.W.
P. O. Box 825 Washington, D.C.
20037 Columbus, Ohio 43216 Regional Administrator Ohio Environmental Protection Agency U.S. NRC, Region III DERR--Compliance Unit 801 Watrenville Road ATTN:
Zack A. Clayton Lisle, Illinois 60523-4351 P. O. Box 1049 Columbus, Ohio 43266-0149 Mr. Robert B. Borsum Babcock & Wilcox State of Ohio Nuclear Power Generation Division Public Utilities Commission 1700 Rockville Pike, Suite 525 180 East Broad Street Rockville, Maryland 20852 Columbus, Ohio 43266-0573 Resident Inspector Mr. James R. Williams U. S. Nuclear Regulatory Commission Chief of Staff 5503 N. State Route 2 Ohio Emergency Management Agency Oak Harbor, Ohio 43449 2855 West Dublin Granville Road Columbus, Ohio 43235-2206 Mr. James H. Lash, Plant Manager Toledo Edison Company Mr. John K. Wood Davis-Besse Nuclear Power Station Vice President-Nuclear, Davis-Besse 5501 North State Route 2 Centerior Service Company Oak Harbor, Ohio 43449-9760 c/o Toledo Edison Company Davis-Besse Nuclear Power Station President, Board of County 5501 North State Route 2 Commissioners of Ottawa County Oak Harbor, Ohio 43449-9760 Port Clinton, Ohio 43452
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Distribution for CEI 12/4/96 meeting summary dated: 1/22/97 Hard Cony w/encls:
4 Docket: File' PUBLIC PDIII-3 Reading
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E-mail w/ Enc 1 1:
l F. Miraglia (FJM)
A. Thadani (ACT)
R. Zimmerman (RPZ)
J. Roe (JWR)
E. Adensas (EGA1)
E.'Barnhill (EEB)
'E. Jordan (JKR)
J. Caldwell (JLCl)
J. Hopkins (JSH1)
B. McCabe.(BCM) 4 S. Hom R. Wood M. Davis j
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i ATTENDEES I
December 4, 1'996' ORGANIZATION-fL@f j
J.'Hopkins NRC S. Hom NRC R. Wood NRC M. Davis-NRC T. Alexander Ohio Edison O. Feltner OE J. Stetz Centerior Energy M. O'Reilly CE G. Charnoff Shaw, Pittman, P. & T.
D. Lewis SPP&T R. Lessy Akin, Gump, Strauss, H. & F.
i
FOR IMMEDIATE RELEASE Contacts for Ohio Edison:
Contacts for Centerior Energy:
Media:
Media:
Ralph J. DiNicola Todd Schneider 330-384-5939 216-447-3200 In estors:
Investors:
Richard H. Marsh David M. Blank 330-384-5318 216-447-2701 Theodore F. Struck II Ron Seeholzer 330-384-5202 216-447-3339 Joele Frank / Judith Wilkinson Abernathy MacGregor Group 212-371-5999 OHIO EDISON COMPANY AND CENTERIOR ENERGY CORP.
ANNOUNCE $4.8 BILLION MERGER Akron, OH, September 16,1996 - Ohio Edison Company (NYSE: OEC) and Centerior Energy Corp. (NYSE: CX) today announced that they have signed a definitive agreement to merge in a tax-free, stock-for-stock transaction resulting in a new holding company named FirstEnergy Corp. The new iolding company will have an equity value of
$4.8 billicn based upon the closing of common stock prices on Friday, September 13, 1996, of $20.75 per Ohio Edison share and $7.625 per Centerior share. This transaction, which is expected to be accounted for as a purchase, has been unanimously approved by both companies' boards of directors. The companies anticipate that the transaction will be accretive to earnings in the first year after the completion of the merger.
The merger would create the nation's 11* largest investor-owned electric system, based on annual electric sales of 64 billion kilowatt-hours. FirstEnergy will serve 2.1 million customers within 13,200 square miles of northern and central Ohio and western Pennsylvania. As of June 30,1996, the combined assets of Ohio Edison and Centerior Energy were nearly $20 billion and annual revenues totaled $5 billion.
Under the terms of the transaction, FirstEnergy Corp. will be a holding company of Ohio Edison and Centerier Energy's operating units, The Cleveland Electric illuminating Company (CEI) and The Toledo Edison Company. Pennsylvania Power Company will remain a wholly owned subsidiary of Ohio Edison. Ohio Edison shareholders will receive one share of FirstEnergy's common stock for each share of Ohio Edison common stock that they currently hold. Centerior Energy shareholders will receive a 0.525 share of FirstEnergy's common stock for each share of Centerior common stock that they currently hold.
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Benefits of the Merger Willard R. Holland, president and chief executive officer of Ohio Edison and chairman of Pennsylvania Power, said, "This merger creates a larger enterprise with more resources to enhance near-term and long-term value to shareholders, provide better setvice at lower prices to customers, and offer more career opportunities to employees than if the companies remained separate. By sharing our employees' skills and each company's best practices, the combination will also enable us to realize substantial economic synergies that will further enhance our cash flow and efforts to accelerate debt reduction."
Robert J. Farling, chairman and chief executive officer of Centerior Energy, said, "This is a win-win-win for our companies, our customers and our shareholders.
Together, we form a larger, stronger competitor, which is essential to our success as our industry continues to evolve. Our alliance will provide our customers and shareholders with more value and our employees with more opportunities than would be possible if we did not join forces."
Mr. Holland continued, "FirstEnergy will be able to provide customers with a wider range of energy services and erianced service restoration capabilities, key advantages as our industry becomes more competitive. In addition, we intend to propose a plan to extend to CEI and Toledo Edison customers a rate reduction program similar to Ohio Edison's. The plan would call for a freeze of CEI and Toledo Edison rates through 2005, a rate reduction of $300 million, or approximately 15 percent, in 2006, and accelerated depreciation of $2 billion in fixed costs during that period.
"Our merger also gives us increased flexibility to maximize the operating
)
efficiency of the generating units that our companies share ownership in through the CAPCO arrangements " Mr. Holland said. "This flexibility, along with the synergies l
we expect from the merger and our intended rate plan, will help us reduce financial risks related to stranded investments in a more competitive electric industry."
The Central Area Power Coordination Group (CAPCO) is comprised of the companies and Duquesne Light Company. FirstEnergy will have complete or majority j
ownership a'.d operational control of seven CAPCO units - Bruce Mansfield Units 1,2 and 3; Sammis Unit 7; Eastlake Unit 5; Davis Besse Unit 1; and Perry Unit 1 - as well as majority ownership of Beaver Valley Units 1 and 2.
Mr. Farling continued, "The combination of our contiguous service areas is a natural. Our service areas are located within a 500-mile radius of one-half of the U.S.
population. We serve several areas that site selection experts have listed among the nation's most successful in recent years for attracting manufacturing locations and (more)
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expansions. Together, we can help our conununities attract jobs over a wider and more i
diverse region, which is served by an extensive infrastructure that includes ten major airports, portions of all major interstate highways in Ohio, multiple free-trade zones, abundant water supplies and a highly integrated network of electrical facilities."
Mr. Farling said, "FirstEnergy will continue the strong traditions of both
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companies for supporting their local communities through financial contributions and through the extensive volunteerism of their employees. In addition, our alliance wil!
l make us Ohio's largest taxpayer, with some $516 million in annual payments, as well as one of the state's largest employers."
Savings from the Merger The companies expect savings related to the merger of approximately $1 billion over the first ten years. The savings will come from the elimination of duplicative activities, improved operating efficiencies, lower capital costs, and the combination of the companies' work forces. In addition to efforts to achieve appropriate staffing levels already underway at the companies, work force reductions resulting from the merger are expected to be approximately 900 positions out of the companies' current total work force of approximately 11,000. The companies will seek to minimize the effect of these reductions by hiring limits, attrition and separation programs. All labor agreements will be honored.
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In addition, the companies' ongoing cost reduction and efficiency improvement programs will be available for implementation throughout the new organization.
Through such programs, reductions in new capital requirements, and lower overheads resulting from the combination of operations, FirstEnergy expects to set an aggressive goal of reducing debt by $2.5 billion through the year 2000.
Dividend Policy It is anticipated that the initial annual dividend on FirstEnergy's common stock will be the same as Ohio Edison's annual dividend, which is currently $1.50 per share.
Based on the share exchange rate at this dividend level, Centerior Energy shareholders will be provided approximately the same dividend income they now receive on Centerior shares. Centerior Energy's current annual dividend is $0.80 per share of common stock.
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4 Management and Operating Unit Structure FirstEnergy will be a public utility holding company that will be the parent of Ohio Edison and its subsidiary, Pennsylvania Power; CEI; and Toledo Edison. The corporate headquarters of the holding company will be in Akron, Ohio. It is anticipated that the principal offices of the operating companies will remain at their current locations.
Willard R. Holland, president and chief executive officer of Ohio Edison and chairman of Pennsylvania Power, will become chairman of the board, president and chief executive officer of FirstEnergy. Robert J. Farling, chairman, president and chief executive officer of Centerior Energy, will become vice chairman of FirstEnergy. The board of directors of FirstEnergy will be designated by Ohio Edison's board.
Approvals and Timing The merger is conditioned, among other things, upon the approval of each company's shareholders and various regulatory agencies, including the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, and the Se::urities and Exchange Commission. Actions in Ohio and Pennsylvania that may oe needed to complete the merger will be undertaken as required. The companies are hopeful that the merger can be completed by the end of 1997.
i Morgan Stanley & Co. Incorporated is serving as finanal advisor to both L
companies. Mcdonald & Company Securities Inc. provided a fairness opinion to Ohio Edison. Barr Devlin & Co. Incorporated also served as a financial advisor to Centerior and provided Centerior a fairness opinion.
Centerior Energy, headquartered in Ini ependence, Ohio, is the holding company for The Cleveland Electric Illuminat ng Company and The Toledo Edison Company. Together, they serve more than or : million customers within 4,200 square miles of northern Ohio. Ohio Edison Compar y, headquartered in Akron, Ohio, and its subsidiary, Pennsylvania Power Company, he idquartered in New Castle, Pennsylvania, serve 1.1 million customers within 9,000 square miles of northeastern and central Ohio and western Pennsylvania.
"Dus press release ira.ludes forward-looking statements within the mearung of secuon 21E of the securities Exchange Act of 19M. These forward-looking statements reflect numerous assumptions and involve a number of risks and uncertaivines. Among the factors that could cause actual results to differ materially are: electric load arvi customer growth; abnormal weather condidons; available sources and cost of fuel and generstmg capacity; the speed and degree to which compeution enters the power generadon.
wholesale and retail sectors of the electnc unlity industry; state and federal regulatory initiadves that increase competioon, threaten cost and investment recovery, and impact rate structures; the ability of the combined company to successfully reduce its cost structure; operstmg periomuure of nuclear generating facilities and decommissioning costs of such facilities; the economic climate and growth in the service terntones of the two companies; e onnmies generated by the merger; infladonary trends and interest rates ard the other risks detailed from ume to hme in the two comparues'sEC repons.
i www.ohioedison.com
%%W.Centerior.Com (091696)
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CONTENTS OF APPLICATION DESCRIPTION OF THE MERGER GENERAL INFORMATION CONCERNING THE LICENSEES TECHNICAL QUALIFICATIONS CURRENT ORGANIZATIONS WILL REMAIN THE PLANT OPERATORS FINANCIAL QUALIFICATIONS LICENSEES WILL REMAIN ELECTRIC UTILITIES
- DECOMMISSIONING FUNDING LICENSEES WILL REMAIN RESPONSIBLE FOR FUNDING NO SIGNIFICANT CHANGE REQUIRING ANTITRUST REVIEW e
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NRC NOTICES
- NOTICE OF CONSIDERATION NOTICE SOLICITING COMMENTS ON NO SIGNIFICANT CHANGE DETERMINATION
- NOTICE OF ISSUANCE J8M694i/DOCSDCl i
LICENSEES AND UNITS INVOLVED IN THE FIRSTENERGY MERGER Davis-Besse Perry E_ paver Valley 1 Beaver Vallev 2 Centerior Service Centerior Service Duquesne Light.
Duquesne Light (co-operator)
(co-operator)
(operator and owner) (operator and owner)
Toledo Edison Cleveland Electric 111. Ohio Edison Cleveland Electric Ill.
(operator and owner)
(operator and owner)
(owner)
(owner)
Cleveland Electric Ill. Toledo Edison Penn. Power Toledo Edison
(' owner)
(owner)
(Ohio Edison sub.)
(owner)
Ohio Edison (owner)
( wner)
Ohio Edison OES Nuclear (owner)
(Ohio Ed. sub.)
(owner)
Penn. Power (Ohio Ed. sub.)
(owner)
Duquesne Light (owner)
FirstEnergy Corp.
Merger Benefits FirstEnergy Corp., the new holding company resulting from the merger at Ohio Edison and Centerior Energy, will become the nation's 11* !argest investor-owned electric system based on total electricity sales. With annual state and local payments of more than $500 raillion and approximately 11,000 employees, FirstEnergy will be Ohio's largest taxpayer and one of the state's largest employers.
1 Serving 2.1 million customers within 13,200 square miles of northern and central Ohio and western Pennsylvania, FirstEnergy will be a larger enterprise with greater resources to provide customers better electric service at lower prices and to enhance our value to shareholders (24 percent of our registered common stock shareholders are Ohioans). FirstEnergy will also offer a wider array of energy-related products and services; continue our strong tradition of community support; and provide our employees with better career opportunities than if we remained separate. Other key benefits of the merger include:
Strategic Advantages A stronger competitor in the energy marketplace With complete or majority ownership and operational control of seven CAPCO generating units and a majority ownership of the other two, FirstEnergy will be able to maximize the operating efficiency of generating assets Economic Development Assistance to Communities Combination of contiguous service areas focuses development efforts on a wider j
region that includes rural settings and mid-to large-sized cities
]
Rate Reduction Program Proposed rate reduction plan similar to Ohio Edison's w. aid call for a freeze of j
CEI and Toledo Edison rates through 2005, followed by a 15-percent reduction in j
2006, and accelerated depreciation of $2 billion in fixed costs during that period Merger Savings Approximately $1 billion in savings over the first ten years because of the elimination of duplicative activities, improved operating efficiencies, lower capital costs and the combination of work forces Reduced hiring, attrition and separation programs will help minimize the effects of the expected elimination of approximately 900 positions due to the combination of work forces Companies will honor all labor agreements Through cost reduction and efficiency improvement programs and lower overheads because of the merger, FirstEnergy expects to reduce debt by $2.5 billion through j
the year 2000 j
v FirstEnergy Corp.
Fact Sheet Merger Agreement FirstEnergy Corp, will be a holding company of Ohio Edison and Centerior Energy's operating units, Cleveland Electric Illuminating and Toledo Edison. Penn Power will remain a wholly owned subsidiary of Ohio Edison. Willard R. Holland will be chairman, president and CEO of the new company, and Robert J. Farling will be vice chairman. FirstEnergy will be headquartered in Akron, and it is anticipated that the principal offices of the operating companies will remain in their current locations.
Ohio Edison shareholders will receive one share of FirstEnergy's common stock for each share of Ohio Edison common stock that they currently hold. Centerior Energy shareholders will receive a 0.525 share of FirstEnergy's common stock for each share of Centerior common stock that they currently hold.
FirstEnergy Statistics FirstEnergy will become the nation's 11* largest investor-owned electric system, based on annual electric sales of 64 billion kilowatt-hours. The company will serve 2.1 million customers within 13,200 square miles of northern and central Ohio and western Pennsylvania. FirstEnergy will be the state's largest taxpayer and one of Ohio's largest employers. The combined company will have $5 billion in annual sales, nearly $20 billion in assets,11,681 megawatts of generating capacity, and 57 transmission interconnections with 8 electric systems.
Merger Benefits The merger creates a larger enterprise with more resources to enhance near-term and long-term value to shareholders, provide better service at lower prices to customers, continue the companies' strong traditions of financial and volunteer support to communities, and offer more career opportunities for employees than if the companies remained separate. Other benefits include: economic vitality of the companies' contiguous service areas; synergies from joining operations; sharing of employee skills and best practices; increased flexibility regarding jointly owned generating units; and improved ability to increase cash flow and reduce debt.
In addition, FirstEnergy intends to propose a rate reduction plan for CEI and Toledo Edison cystomers, similar to Ohio Edison's, that would call for a rate freeze through 2005, rate reduction of 15 percent in 2006, and accelerated depreciation of $2 billion in fixed costs.
Through cost reduction and efficiency improvement programs, reductions in new capital requirements, and lower overheads from the merger, FirstEnergy expects to set a goal of reducing debt by $2.5 billion through 2000, which will significantly reduce financial risks related to stranded investments in a more competitive electric industry.
Ohio Edison and Centerior Enerry: Facts At A Glance Period Ended June 30,1996 Ohio Edison Centerior Energy FirstEnergy Customers 1,099,746 1,031,998 2,131,744 Employees 4,514 6,592 11,106 Service Area (Square Miles) 9,000 4,200 13,200 Population 2,872,000 2,610,000 5,482,000 Generating Capacity (MW) 5,757 5,924 11,681 Record Peak Load (MW) 6,332 5,779 12,111 Transmission Line Miles 4,576 1,922 6,498 Transmission Interconnections 36 21 57 Distribution Line Miles 26,114 27,572 53,686 Transmission Substations 58 39 97 Distribution Substations 362 265 627 Financial Highlights 12 Months Ended June 30,1996 (Millions, except per share amounts) i Revenues
$2,495
$2,535
$5,030 Earnings on Common Stock
$301
$164
$465 Earnings Per Share
$2.09
$1.11 N/A Dividends Per Share
$1.50
$0.80 N/A Common Shares Outstanding 152.6 148.0 N/A Capital Expenditures
$144
$204
$348 Kilowatt-hours Sold 34,603 30,820 65,423 Financial Highlights At June 30,1996 (Millions, except per share amounts)
Total Assets
$8,643
$10,462
$19,105 Total Common Equity
$2,448
$1,920
$4,368 Book Value Per Share
$16.99
$12.97 N/A j
Closing Price (9/13/96)
$20.75
$7.625 N/A
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4 Ohio Edison Company and Centerior Energy Corporation Profile Ohio Edison Company (NYSE:OEC), is an investor-owned electric utility head-quartered in Akron, Ohio. Its subsidiary, Pennsylvania Power Company, is based in Ne Castle, Pennsylvania. The companies provide electric service, as well as a variety of energy-related products and services, to 1.1 million customers within 9,000 square miles of northeastern and central Ohio and western Pennsylvania.
For three consecutive years, the largest area the ccmpany serves, Akron and Summit County (Ohio), has been ranked among the nation's top 20 metropolitan areas for siting and expanding manufacturing plants. Over the same period, economic growth across th company's service area has contributed to Ohio's top ranking in attracting new and corporate facilities. In 1995, the company added 2,628 industrial and commercial bus The company also achieved record retail sales for the third consecutive year -
26.4 billion kilowatt-hours in 1995, up 5.1 percent from the previous year. For the twelve months ended December 31,1995,26 percent of total kilowatt-hour sales came from residential customers,21 percent from commercial customers, 32 percent from industrial customers and 21 percent from wholesale and other transactions.
The company's generating capacity by fuel source is: 73 percent coal,20 percent nuclear, 5 percent oil, and 2 percent natural gas.
Community Involvement Ohio Edison is committed to improving the economic and social conditions in the communities where our customers and employees live and work. The company's efforts at philanthropy, education, volunteerism and economic development reflect a strong community involvement. Working with other businesses, government and the non-profit sector, the company helps promote the health, safety and economic vitality of the comm we serve.
The company supports many charitable, civic and cultural organizations, and has
- to developed programs to help people - from providing financial aid to needy customt helping teachers plan lessons on energy. Employees are encouraged to become acti volunteers with community organizations because helping meet human needs will ensure a brighter future for our communities and customers.
Ohio Edison's commitment to corporate citizenship is a basic part of the company's approach to doing business. A company is measured not only by the quality of its pr and services, but by the strength of its partnership with the larger community. Ohio Edison will strive to make sure the company and its employees continue to be responsive to the nee of the communities we serve.
2 Environmental Commitment Ohio Edison's commitment to the environment is a long-standing tradition. The company is a leader in environmental innovation, responsibly managing and protecting natural resources. Since the mid-1970s, the company has spent $2.5 billion on environmental protection. Ohio Edison's employees take pride in the company's environmental achievements and intend to build on those accomplishments in the years ahead.
CENTERIOR ENERGY CORPORATION Centerior Energy Corporation (NYSE:CX) is an investor-owned electric utility headquartered in Independence, Ohio. The company was formed in 1986 through an affiliation of The Cleveland Electric Illuminating Co. (CEI) and The Toledo Edison Co. The companies provide electric service and a variety of energy-related products and services to more than one million customers in a 4,200-square-mile service area in northern Ohio.
Since third-quarter 1995, the company has been structured in six related but distinct strategic business groups: distribution, which operates as a utility delivering electricity to 2.6 million people; power generation, which operates eight fossil-fueled and two nuclear-fueled plants spanning Centerior's service area; transmission, which manages the flow of power through 1,922 miles of lines and 21 interconnections with four other electric power systems in three other states; business enterprises, which pursues business opportunities that build on Centerior's core competencies in energy; services, which supports the other groups; and administration, which handles internal and external matters such as finance, law, regulatory and governmental affairs and shareholder relations.
With 1995 revenues of $2.5 billion and ass is of $10.6 billion, the company ranks 486*
on the Fortune 500 list. It is the 33 -largest inves or-owned utility in the country, according to d
Fortune, and is Ohio's largest taxpayer, with annu il payments of $320 million.
Centerior's customers include many of Ohi >'s leading bd.nesses, among them BP America, Ford Motor Company, General Motors, LTV Steel Company and Sun Oil. The company also serves several major universities, in :luding Cleveland State University, John Carroll University, Baldwin-Wallace College and he University of Toledo.
The Centerior service area has become a national leader in job creation, and the company's economic development efforts have spurred that trend. In 1995, those efforts helped bring 34 new projects into existence, producing annual revenues of about $23 million for the company. Major new customers - including North Star BIIP Steel, Worthington Steel and Aluminum Company of America - signed on in 1995, and Centerior support helped existing customers expand, among them Ford Motor and American Steel & Wire.
In 1995, kilowatt-hour sales were 23 percent residential,25 percent commercial, 40 percent industrial and 12 percent wholesale and other transactions.
3 Ohio Edison Mananement Team t
Willard R. Holland, 60, chairman and CEO of Ohio Edison; chairman of Penn Power l
H. Peter Burg,50, president, COO and CFO l
Anthony J. Alexander,45, executive vice president and general counsel l
Robert J. McWhorter, 64, senior vice president Earl T. Carey, 54, vice president l
Arthur R. Garfield, 58, vice president John A. Gill,58, vice president Barry M. Miller,63, vice president Guy L. Pipitone,46, vice president David L. Yeager, 61, vice president l
l Nancy C. Ashcom,48, secretary l
Richard H. Marsh,45, treasurer Harvey L. Wagner,44, comptroller l
Centerior Energy Mananement Team i
Robert J. Farling,59, chairman, president and chief executive officer Murray R. Edelman,57, executive vice president Fred J. Lange Jr.,46, senior vice president i
Gary R. Leidich,45, senior vice president Terrence G. Linnert,49, senior vice president, chief financial officer and general counsel Jol.n P. Stetz,50 senior vice president Jacquita K. Hauserman,53, vice president I
Lew W. Meyers,47, vice president David L. Monseau,55, vice president Stanley F. Szwed,43, vice president j.
John K. Wood, 45, vice president l
E. Lyle Pepin,54, controller David M. Diank,47, treasurer Janis T. Percio,43, secretary 3
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4 Operatine Statistics
- Ohio Edison Centerior Energy Customers 1,099,746 1,031,998 Employees 4,514 6,592 Service Area (Square Miles) 9,000 4,200 Popu'ation 2,872,000 2,610,000 Kilowatt-hours Sold (Millions) 34,603 30,820 Generating Capacity (MW) 5,757 5,924 Record Peak Load (MW) 6,332 5,779 Transmission Line Miles 4,576 1,922 Transmission Interconnections 36 21 Distribution Line Miles 26,114 27,572 Transmission Substations 58 39 Distribution Substations 362 265
- As of June 30,1996 Financial Highlights (Millions, except per share amounts) 12 Mos. Ended 1995 1994 June 30.1996 j
Ohio Edison Revenues
$ 2,495
$2,466
$2,368 Net Income
$319
$317
$304 Earnings Per Share
$2.09
$2.05
$1.97 Dividends
$1.50
$1.50
$1.50 l
Total Assets
$ 8,643
$8,824
$8,994 Common Shares Outstanding 152.6 152.6 152.6 Capital Expenditures
$144
$166
$227 Centerior Energy Revenues
$2,535
$2,516
$2,421 Net Income
$164
$220
%204 i
Earnings Per Share
$1.11
$1.49
$1.38 Dividends Per Share
$.80
$.80
$.80 Total Assets
$10,462
$10,643
$10,691 Conunon Shares Outstanding 148.0 148.0 148.0 Capital Expenditures
$204
$201
$205 l
O FirstEnergy-4 4
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I MERGER OVERVIEW i
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Ohio Cencerior Edison
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Common S$1re Common S$2re I
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