S&P Still Expects Consummatn of Ohio Ed/Centerior Mrgr

Business Wire, July 22, 1997

NEW YORK--(BUSINESS WIRE)-- Standard & Poor's CreditWire 7/22/97 --Standard & Poor's considers the decision by the Federal Energy Regulatory Commission (FERC) to delay the merger of Ohio Edison Co. and Centerior Energy Corp. surprising.

Standard & Poor's July 9 decision to downgrade Ohio Edison to a corporate credit rating of double-'B'-plus from triple-'B'-minus and to upgrade the Centerior utilities, Cleveland Electric Illuminating Co. and Toledo Edison Co., to double-'B'-plus from double-'B' anticipated FERC approval of this merger.

The commission's concern about market power issues was not expected since these two companies combined would control a much smaller percentage of generation and transmission in Ohio and Pennsylvania than their neighboring competitors. Furthermore, these companies are among the highest cost utilities in the Mid-Atlantic region and in the country. Standard & Poor's believes this merger eventually will be completed since these utilities need to combine to survive in a deregulated, competitive marketplace. Market power mitigation actions, if required by FERC, are not expected to diminish projected merger benefits. Therefore, at this time, the companies' ratings and their positive outlooks will not be changed. However, the FERC's action indicates it will not approve the merger if competition is restrained by the combination of the two companies or their control of generation and transmission. Standard & Poor's will monitor the companies' response to FERC's choice to either remedy the potential market power problems or file a revised and corrected competitive analysis. If this results in a definitive disapproval by the FERC or a termination of the merger, prior ratings will be restored. -- CreditWire

CONTACT: Steve Zimmerman, New York (1) 212-208-1658

John J Bilardello, New York (1) 212-208-1525