Tri-County Rural Electric Cooperative has entered into an asset purchase agreement to acquire the Waverly, N.Y., electric distribution assets of Pennsylvania Electric Co., a subsidiary of FirstEnergy Corp.
Under terms of the purchase agreement, Tri-County proposes to acquire all of the New York-located distribution assets of Penelec. These assets comprise 179 miles of electric line and two substations that provide electric service to about 3,800 customers in the Village of Waverly and Town of Barton in Tioga County, N.Y.
The purchase is contingent on authorization from the New York State Public Service Commission. Penelec and Tri-County will submit the required regulatory filings in April, and the regulatory review process is anticipated to take at least 12 to 18 months to complete.
Tri-County’s existing service area is contiguous to the southern portion of Penelec’s Waverly territory, and the cooperative has been providing power to a limited number of consumer-members in New York’s Allegany, Steuben and Chemung counties since the 1940s.
Tri-County intends to add Penelec’s Waverly customers to its cooperative membership upon completion of the acquisition.
“We are excited for the opportunity to expand further into the Southern Tier of New York,” said Tri-County President and CEO Kevin Brownlee. “Democratic member control and concern for the community are two of our guiding cooperative principles. This transaction will allow the residents of Waverly and Barton to join the more than 18,000 New York residents, and 42 million people nationwide, who are member-owners of their cooperative electric service provider.”
Electric cooperatives are private, not-for-profit businesses owned by the members they serve. As such, members have a financial stake in the cooperative, which is funded through their rates. During years in which revenues exceed costs, cooperatives can provide payments back to the members by retiring capital credits. Tri-County has returned approximately $6.5 million in capital credits to its member-owners since 2010.
Tri-County’s member-owners also have the ability to participate in governance of the cooperative by electing fellow members to the cooperative’s nine-member board of directors.
Upon completion of the asset purchase, the board of directors would be expanded by one seat to provide member representation for the Waverly/Barton area.
Tri-County also anticipates creating a manned operations district in the Sayre/Waverly area to support maintenance and service restoration for the northeastern portion of Tri-County’s Pennsylvania and New York territory.
Tri-County President and CEO Kevin Brownlee Brownlee said the Waverly territory’s close proximity to the cooperative’s existing service area will allow Tri-County to achieve economies of scale and spread costs across a larger membership.
“More importantly,” he said, “Tri-County will be able to enhance reliability and improve response time for existing co-op members in the northeastern corner of our service region through the creation of a new operations district in the Sayre/Waverly area. Having a line crew stationed locally would provide those same benefits to consumers in the Waverly and Barton areas.”
The proposed purchase is of distribution assets only, and no Penelec employees will be transferred. Penelec currently services the Waverly territory from its Towanda operations center.
“Penelec has long been dedicated to serving our New York customers, and we are certain that if the sale is authorized, customers in the Waverly area will be served by a reputable cooperative with an established history of providing reliable electrical service in rural locations,” said Nick Austin, regional president of Penelec.
Tri-County Rural Electric Cooperative, Inc., with headquarters in Mansfield, provides electric service to approximately 16,700 consumer-members and 19,400 meters in Potter, Tioga, Bradford, Lycoming, Clinton, McKean and Cameron counties in Pennsylvania, and Allegany, Steuben and Chemung counties in New York.
Penelec serves approximately 585,000 customers in northern and central Pennsylvania. It is one of ten regulated electric distribution subsidiaries of FirstEnergy Corp. (NYSE: FE) one of the nation’s largest investor-owned electric systems, serving customers in the Midwest and Mid-Atlantic regions.