Ue Gripes about Delays in Merger Faults Federal Approval Process

Article excerpt

Seventeen months after they proposed marriage, Union Electric Co. and CIPSCO Inc. are chafing at delays in getting to the altar.

Having pushed the merger's closing date back 12 months to late 1997, the utilities recently wrote that the federal approval process is "simply too long and extremely prejudicial."

UE and CIPSCO representatives soon will get a chance to say in person what they already have told federal regulators by letter. The Federal Energy Regulatory Commission (FERC) begins hearings Jan. 29. A preliminary ruling is due by April 30 on the creation of a new holding company, Ameren Corp. UE and CIPSCO would retain separate operating identities and headquarters in St. Louis and Springfield, Ill., respectively. The utilities, which also need approval from Illinois and Missouri regulators, say delays are hurting efforts to produce the savings they had promised when they announced the merger - $760 million in savings over 10 years. "It is becoming more and more difficult to operate the companies separately on a stand-alone basis as time drags on," the utilities wrote to the FERC in early November. The agency has not responded. The utilities said 252 employees had left both companies in the 12 months ended Sept. 30. Although UE and CIPSCO predicted that the merger would cost about 300 jobs through attrition, they say regulatory delays have created work force problems. "It's not affecting service to our customers, but it is beginning to pinch us in terms of staff," William E. Jaudes, UE's general counsel, said last week. "It's hard to attract quality people for temporary work." The merger will consolidate white-collar functions like accounting, investor relations and information services. But people who know that their jobs won't exist after the merger - or who aren't happy with post-merger assignments - have found jobs elsewhere or have retired, leaving UE and CIPSCO to scramble to fill their places. UE isn't sure whether new federal regulations announced in December will accelerate the merger review. The FERC said the rules will hasten federal approval of merger proposals - which have multiplied dramatically in recent years - enabling deals to be evaluated within 15 months. "The new guidelines are more than 70 pages long," Jaudes said. "Based on the summaries we've seen, we don't think they will cause any problems. I don't know whether it will speed things up or even apply to us because we filed our application before the guidelines were issued." The Edison Electric Institute, a trade group, also wonders about the potential impact of the new rules. "FERC hasn't commented on whether merger proposals filed beforehand would be subject to the new rules," said Mary Kenkel, the group's director of media relations. …