8/23/99 -- 3:28 PM Ninth-largest electric utility created by CP&L buy of Florida . . RALEIGH, N.C. (AP) - Carolina Power & Light Co. will acquire Florida Progress Corp. for $5.3 billion, creating the nation's ninth-largest electric utility. . . ``This gives us the size and the scope we need to be successful in the future,'' said William Cavanaugh, CP&L's chairman, president and chief executive officer. . . CP&L will create a holding company to operate the utilities, Carolina Power and Florida Power, as subsidiaries. The merged company will have a generating capacity of 18,500 megawatts, revenues of $6.7 billion and 2.5 million customers. . . The two utilities expect the merger to translate into savings of more than $100 million a year. . . CP&L is buying Florida Progress at a premium, paying shareholders of the St. Petersburg-based utility $54 for each share of common stock - 21 percent above Florida Progress' closing price Friday. . . The agreement announced Monday was approved over the weekend by the boards of directors at both companies. The deal, which also includes CP&L taking over $2.7 billion in debt, must be approved by state regulators in the Carolinas as well as several federal agencies. . . About 1,250 positions, or 7 percent of the total work force - will be cut as a result of the merger, with most of the cuts coming largely through attrition, the companies said. . . Analysts said the combination looked like a good match between two regional utilities whose peak generating periods don't overlap and who have complementary residential and industrial customers bases. . . The Raleigh-based CP&L has more business and industrial customers and the St. Petersburg, Fla.-based utility has more residential customers, both in high-growth states. . . ``What the public will get are financially stronger utilities and utilities that will be able to keep the prices frozen for a long period because of the strength they get from the merger,'' said Barry Abramson, a utility stock analyst with PaineWebber in New York. . . The utilities ``also see that deregulation is coming eventually and they know that size and scope is going to be very important,'' Abramson said. ``It's better to prepare yourself early for something that is going to happen. ...The Southeastern states are way behind the other states in implementing utility deregulation. Regulators don't feel a pressing need because they already have low rates.'' . . Cavanaugh, 60, will lead the new company as chairman, president and chief executive officer. Richard Korpan, the head of Florida Progress, will retire as that company ceases to exist. He will serve on the board of the new holding company. . . Florida Power Corp., the electric subsidiary of Florida Progress, will still be based in St. Petersburg. The license of its nuclear plant, Crystal River, will be transferred to CP&L pending approval by the Nuclear Regulatory Commission. Thomas Hamlin, an analyst with First Union Capital Markets, said Florida Power will benefit from CP&L's expertise in operating nuclear power plants. . . ``As competition comes, customers will always be better served by having more efficient power suppliers,'' Hamlin said. Investors pushed Florida Progress' stock up 4 percent, or $2.12 1/2 to $46.75, in trading on the New York Stock Exchange. CP&L's shares sagged 6 percent, falling $2.37 1/2 to $36.62 1/2. Copyright 1999 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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-- Shelia (Shelia@active-stream.com), August 23, 1999

Answers

Holy Merging Batman!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

-- (wh@t's_your.point), August 23, 1999.

How will this merger make money in the deregulation or reregulation arena? Will your new company become a wire and services company only? Will your new company sell power to the large load customers and to the ESP'S, then force the little customers to buy their power from the E.S.P's or the energy service provider's? How are you going to solve the problem of the collections of money on past due account's when customers can purchase power from ESP'S? Will the ESP's pay for your power and will the ESP'S then have to worry about the collection of the past due?

-- R. J. Renolds (steal1@nvaj.com), August 23, 1999.

None of the above R.J. Reynolds, electric utilities will become either Federally operated or state operated. For right now, the acquiring company will maintain the billing, maintenance, and distribution. No doubt there will be massive layoffs in management and clerical. If you are a part of maintenance, i.e. lineman, electrician, gas service personnel, etc., you will have a job. Anyone that is not directly related to servicing the customer, your job could be in jeopardy especially management and they will be the first to go. Top management will be given an excellent "butt in the door" package, and middle management will onlt get a butt in the door. If Y2K is a category 4, all utility personnel in operations and maintenance will be ordered to report to work, that is if you can get into contact with personnel. So far, I have not seen anything in writing nor has it been discussed on how utilities are going to handle "emergency response teams." This is where the danger lies. If utilities address the "probabilities" to their employees, they cannot control what their employees say outside of the work place, which in turn would cause a great deal of public stress. It's a Catch-22 situation and I am convinced it will be "fix-on-demand."

-- lineman for the county (linemanforthecounty@linemann.com), August 23, 1999.

Not so fast on the "If you are part of maintenance.." line. CP&L shed most of its maintenance activities a couple of years ago. Now its power plant and transmission lines maintenance crews are from a wholly-owned subsidiary which it contracts to. And the workers are all "independent contractors" (read: temps) who work for the subsidiary in pay-your-own benefits situations. I'll bet that the maintenance crews in Florida are not happy about being bought by CP&L.

But bet that the senior executives will be happy. A golden parachute out of their Florida Power jobs and landing in high-paying CP&L jobs. Meanwhile people like my brother-in-law look at the dwindling pile of money they got from forced early retirement and realize they've got to go back to work for CP&L's front company for less than they made before and with no benefits either.

Yep, the worker bees in Florida see it coming, 1,250 positions to be cut through attrition (forced early retirement) and additional cost savings through outsourced maintenance work (done by the same guys as before, just at lower wages). And like these folks will battle round the clock through all manner of foul weather in the name of being a "public service" utility.

I somehow suspect that in certain service areas if the power goes of come 01/01/2000, it'll be a cold day in... Florida, before the workers decide to go out in the potential social mess to try and get the lights back on.

WW

-- Wildweasel (vtmldm@epix.net), August 24, 1999.

Shelia, are you writing this thread in the Y2K forum to test the reactions of the future FPL loyalty of customers? Reregulation, deregulation, merger, Y2K, we are all watching you. This merger will never make our power bills stable at it's current price. Tell us about the wire and services part of your plan. Tell us how a percentage of our power bill will go exclusively to that part of the business. Tell us how the large commercial customers will see the lower price and the regular customers will see the increase, to off set the difference. Mr. lineman, you are right, the work hands currently will be turned into company owned contracters at a lower wage and benifits or fired. Do you think your unions will protect you? Look what has been done to them now, for God's sake! Look at your benifits dwindle right now! Read your trade magazine, I.B.E.W.. The management has stated in many an article that we as members must be willing to work with the future in order to remain strong. What does that mean? This merger, all it does is make the big fish bigger so they can gobble up the smaller fish. In Oregon, a Senete Bill 1149 was passed. This bill will hold the big fish back so the smaller fish can survive. Pacific Power and Light can not sell it's power to the large industrial and commercial customers in the State of Oregon. This will limit the monopoly influance greatly for the power industry. Maybe this type of legislation needs to be passed in Florida and South Carolina?

-- D.Willis (hooks@ppl.com), August 24, 1999.

'Shelia, are you writing this thread in the Y2K forum to test the reactions of the future FPL loyalty of customers?'

Hey, I apologize to all of you...I posted it because I consider all of these ongoing mergers (whatever industry) to be part of the scrambling to keep their heads above the inevitable waters. ... and one of the last rip-off maneuvers of the American public. I know it won't lead to better service...the bigger any organization gets, the sloppier their product/service/response becomes.

I'm in Texas and don't have a clue about the power situation in Florida and the east...but considering what you are saying about the linemen being outside consultants (temps) it sounds familiar ...

I can also imagine we will pay the price for the understandable lack of loyalty to the 'firm', when folks say , "hey, I'm not risking my life for a job.' Here in TX, I know a guy who gets paid big bucks (telephone co.) for going on special jobs after hurricanes and such. I would imagine these guys working the lines will have some leverage and perhaps some respect if things get bad.

-- Shelia (Shelia@active-stream.com), August 24, 1999.