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Two big utility deals received a seal of approval from the Federal Energy Regulatory Commission Thursday, and the agency affirmed a third merger it had approved in July. FERC approved Charlotte, N.C.-based Duke Energy Corp.’s $9.1 billion plan to acquire Cincinnati’s Cinergy Corp., making it one of the largest utilities in the country, and also approved MidAmerican Energy Holdings Co.’s $5.1 billion deal to buy Scottish Power plc’s PacifiCorp unit. “Even though it is a large merger, the market analysis is straightforward,” FERC Chairman Joseph Kelliher said of the Duke-Cinergy merger. During the commission’s agenda meeting Thursday, FERC said it found the Duke-Cinergy merger to be in the public interest, noting that there’s very little overlap between the two utility systems. The commission added that it found no competitive concerns from the merger. On the MidAmerican-PacifiCorp deal, Kelliher said the two are remote from each other and the two companies control very little generating capacity outside their home markets. FERC Commissioner Suedeen Kelly added that the merger should also spur much needed investment in PacifiCorp’s transmission grid because of MidAmerican’s access to the capital of its holding company, Berkshire Hathaway Inc. Consumer advocates, however, are appalled at the ease with which the deals were approved. “This cements FERC’s reputation as a captured agency,” said Tyson Slocum, energy research director at Washington-based Public Citizen. Slocum added that consumer advocates had hoped FERC would be more thorough in its merger reviews after repeal of the Public Utility Holding Company Act earlier this year eliminated separate reviews that had been conducted the Securities and Exchange Commission. “These quick approvals make it clear that our fears are being confirmed,” he said. “There’s not a lot of faith in FERC.” State regulators have also raised concerns. In September, state-owned utility South Carolina Public Service Authority urged the commission to reject the Duke-Cinergy merger, arguing that the combined company could unfairly dominate the market. In November, a settlement on rates was reached with South Carolina and also the state of Kentucky. The deal is still waiting for approval from state regulators in North Carolina, Indiana and Ohio. It also needs approvals from the Nuclear Regulatory Commission, the Federal Communications Commission and shareholders of both Duke Energy and Cinergy. The companies hope to close the deal in the first half of 2006. Separately, FERC upheld its decision to approve the $12.6 billion acquisition of Newark, N.J.-based Public Service Enterprise Group Inc. and Chicago-based Exelon Corp. Some states and consumer groups appealed to FERC, asking the commission to rethink its decision and arguing that a public hearing should have been held where they could air their concerns about the market implications of the two companies joining to form the largest utility in the country. The states and groups argued that the merger would lessen competition and result in higher bills for consumers. Nevertheless, FERC remained steadfast in its original decision finding the merger in the public interest. The commission pointed out that the proposed merger included mitigation measures, such as a substantial divestiture of generation, to curb any competitive harm that might arise from the merger. The deal won U.S. antitrust clearance in August without receiving a second request for information from the Federal Trade Commission. Copyright �2005 TDD, LLC. All rights reserved.

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