The FirstEnergy Corp. (FE) and Allegheny Energy Inc. (AYE) merger cleared its final regulatory hurdle Thursday, serving as a positive indicator for future mergers that may be brewing in the power industry.

The Pennsylvania Public Utilities Commission approved the $4.7 billion deal Thursday, after examining the impact it would have on rate payers. Federal regulators and other states had already approved the merger.

Pennsylvania had been the holdout amid concerns the governor raised that the merger would reduce electricity competition and lead to thousands of job cuts. Power executives have been closely watching this deal and similar ones to see how state utility commissioners handle cost-cutting initiatives, which often mean job cuts, at a time when states are grappling with unemployment rates are high and sluggish economic growth.

FirstEnergy and Allegheny executives had committed to no net reductions in jobs at its utilities to maintain service reliability for customers.

With no regulatory hurdles left, the deal is expected to close this quarter. The combined companies will be one of the largest utilities in the U.S., serving 6 million customers in seven states with $16 billion in annual revenues.

FirstEnergy shares were recently up 0.2% at $38.13 and Allegheny's stock was up 0.1% at $25.15.

-By Naureen S. Malik, Dow Jones Newswires; 212-416-4210; naureen.malik@dowjones.com
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