California Energy Crisis Causes Concerns Over Reliability

With the introduction of deregulation in California, San Diego Gas & Electric’s (SDG&E) 1.2 million customers were the first in the state to pay free-market prices for electricity. They paid as much as 14.3 cents for a kilowatt hour of electricity in July, up from just 3.9 cents a year ago. The recent increase in electricity prices, with customers seeing a 16 percent increase, has caused severe backlash from government and consumer groups.

AKRON, OH, and MORRISTOWN, NJ-FirstEnergy Corp. and GPU Inc. have announced that both companies’ boards of directors have unanimously approved a definitive merger agreement under which FirstEnergy would acquire all of the outstanding shares of GPU’s common stock for approximately $4.5 billion in cash and FirstEnergy common stock. FirstEnergy also would assume approximately $7.4 billion of GPU’s debt and preferred stock. The combined company would have an equity value of approximately $8.5 billion, based upon the closing stock price on August 4, 2000, of $26.94 per FirstEnergy share.

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