Annual Annual EPS
Close Close Percent 52-Wk 52-Wk Div Div Book P/E Last
Company Region 06/30/95 10/02/95 Change High Low Rate Yield Value Ratio 12 Mos.Electric UtilitiesAEP...
How 165 lawyers were mostly on the wrong side in the biggest electric merger to date.
With Warren Buffet buying up MidAmerican Energy as his own personal utility, and Bill Gates taking a stake in Avista, the standard electric merger starts to look tame.
For that and other reasons, I believe it's all but certain that the Federal Energy Regulatory Commission will soon OK the electric industry's biggest-ever merger, combining American Electric Power Co. with Central and South West Corp. Of course, that ruling will come as bad news for many of the 165 lawyers I counted as having appeared on the record in that case.
But it's good news for the AEP lawyers. If they win they get their lives back.
It's been 15 years, or maybe longer, since I first met Lon Bouknight Jr., an electric utility merger specialist now practicing law at Steptoe and Johnson, and one of the lead lawyers on the case representing AEP.
Now understand that Lon is a very intelligent guy - he could probably build his own electric grid with all the knowledge he's soaked up. But handling a utility merger case is pretty demanding. The work never lets up. Some things you don't have time for. You can lose track of real life.
I recall once that we were sitting next to each other at an industry lunch in San Francisco. As the hotel waiters ran between the tables, passing out the coffee and carrot cake, we both turned our chairs to get a better look at FERC chair Elizabeth Moler, our luncheon speaker on that day. She opened with a joke about a story she had seen on TV the night before. It had something to do with bungee jumping. Everyone in the room burst out laughing. Then, as the laughter changed to applause, Lon turned and whispered in my ear.
"Bruce," he asked, "What's bungee jumping?"
That's why I think AEP is sure to win the merger battle.
THE MERGER OPPONENTS WERE DOOMED WHEN THE FERC ISSUED ORDER 2000 in December, and then followed with its purported "conditional approval" of the proposed Alliance transco, of which AEP would be a key member.
First, by deciding that utilities were free to choose to form or join a regional transmission organization (RTO), the commission gave itself no choice but to OK the AEP merger. The company had built its strategy around the Alliance group as an alternative to the Midwest Independent System Operator. Some merger opponents, such as Dayton Power & Light Co., had argued that MISO was better-suited for AEP. But for the FERC to agree would repudiate its stance against mandates.
Then came the Alliance order. By keeping Alliance alive, but telling the five Alliance participants to go back and fix the proposal (relieve rate pancaking; improve board independence; widen geographic scope), the commission foiled the many merger opponents who had questioned AEP's commitment to a qualifying RTO because of those same objections. Those quibbles have now become moot.
Let's pull out the map. With Central and South West added in,