Good evening, ladies and gentlemen. My name is Kurt Lewandowski. I am an attorney with the New Jersey Division of the Ratepayer Advocate. Our office represents the interests of all utility ratepayers in proceedings before the Board of Public Utilities. We are investigating the proposal to merge GPU, Inc. into FirstEnergy Corp., which is the subject of tonight’s public hearing.

GPU, Inc. is JCP&L's parent company and owns all the common stock of JCP&L. JCP&L now operates under the name, GPU Energy. FirstEnergy Corp. is the parent company of three electric utilities in Ohio and one electric utility in Pennsylvania. The petition requests authority to merge GPU Energy into FirstEnergy Corp., so that GPU Energy would be a wholly owned subsidiary of FirstEnergy, similar to the three Ohio electric utilities. FirstEnergy is headquartered in Akron, Ohio.

In November 2000, the Joint Petitioners, FirstEnergy Corp. and GPU, Inc., filed a petition before the Board of Public Utilities to approve the acquisition of GPU Inc. by FirstEnergy Corp. The Board transmitted the case to the Office of Administrative Law which has scheduled tonight's public hearing and a second public hearing on Thursday, April 19 in Morristown. In addition, evidentiary hearings are scheduled for April 30 through May 11 (except May 4) at the Office of Administrative Law in Newark.

The Ratepayer Advocate has been reviewing this proposal and has concluded that the Administrative Law Judge should recommend that, at this time, the Board of Public Utilities should not approve the merger as it is currently structured.

The Ratepayer Advocate believes that the Board should not approve any utility merger unless the petitioners can prove that the merger will provide benefits to the New Jersey customers who are being affected. The Joint Petitioners in this case have not given a definitive calculation of what financial benefits will come from this merger or committed to increasing service quality to GPU Energy's customers.

The Ratepayer Advocate considers defined benefits as necessary commitments before the merger should be approved. The Joint Petitioners should be required to provide a reliable calculation of what financial benefits are expected from the proposed merger. GPU Energy's New Jersey customers should get their fair share of any cost savings from the merger by having their rates reduced by the full amount of the cost savings.

The Joint Petitioners also have not been able to provide an accurate accounting of what additional costs might eventually be charged to the New Jersey customers resulting from the merger. The Ratepayer Advocate urges the ALJ and the Board to require the Joint Petitioners to calculate the expected costs that could be charged to customers or subtracted from the merger savings and provide the parties to this case with that calculation. GPU Energy's customers have the right to know more about any additional costs that could be incurred due to the merger and how they will be impacted by them.

Any acquisition of a New Jersey utility by an out-of-state company presents the issue of whether the new out-of-state utility management will place sufficient emphasis on the local issues of providing high quality service and affordable rates to New Jersey customers. Although GPU Energy's current parent company is already operating out-of-state in Pennsylvania, there is still an issue concerning local service quality and rates when the parent company will be moved even further away to Akron, Ohio.

The Ratepayer Advocate also opines that the Joint Petitioners should prove that the proposed merger will not negatively impact the New Jersey employees of GPU Energy before the Board should approve the merger. Up to now, the Joint Petitioners have failed to guarantee that New Jersey employees will not be disproportionately affected by the downsizing that may be considered to achieve some merger savings. New Jersey employees of GPU Energy deserve to know more about how the merged companies will affect their future.

The Ratepayer Advocate has also proposed a series of service quality standards that the merged companies should be required to meet so that the new company will be working to improve service reliability over the existing service territory.

Other issues involved in this case that the Ratepayer Advocate believes should be considered as a requirement of the merger include:

• maintaining a high corporate presence in New Jersey so that senior executives are available in New Jersey to operate the New Jersey utility in a safe, adequate and proper manner, and
  
• a commitment by FirstEnergy to provide additional low cost and cleaner energy to JCP&L customers to help keep electric bills affordable and to improve the quality of our environment, and
  
• a commitment for additional assistance in paying bills for customers in financial need.

But the purpose of tonight's public hearing is for you, the customer, to voice your opinion, relate your experiences and offer comments about the proposed merger and how you believe it may affect you. This hearing is being transcribed, and your comments will become part of the official record in this case. It is important that you express your views because they become part of the record on which the Administrative Law Judge and the Board will make their decision.

The Ratepayer Advocate also wants to hear your views. We strongly encourage your participation, which will help us evaluate the merger proposal. On behalf of the Ratepayer Advocate, I would like to thank you for attending this evening.

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