HARRISBURG, Pa.---A state House bill on hostile acquisitions of electric utilities is sound public policy and it is particularly important as increased competition comes to the electricity marketplace, PP&L Resources' chairman told the House Consumer Affairs Committee Monday (11/6).

"While the state Public Utility Commission already is required to approve or disapprove electric utility acquisitions, this bill clarifies what the PUC needs to consider in making this decision," said William F. Hecht, PP&L's chairman, president and chief executive officer. "Because this is a policy matter, legislative direction is appropriate."

House Bill 2075 would require the PUC to determine that a hostile takeover of an electric utility is in the best interests of communities, ratepayers, shareowners and employees of both companies. It also would require an aggressor company to pay the costs of the target company in the event of an unsuccessful hostile takeover attempt.

"This bill is particularly important as increased competition in the electric utility industry is resulting in many utilities considering mergers or hostile takeovers," said Hecht.

Just last week, the PP&L Resources board of directors rejected a PECO Energy acquisition proposal, the second such proposal since August. PECO withdrew its acquisition proposal following the PP&L rejection last week, but the matter has led to considerable concern about possible hostile takeovers in the electric utility industry, Hecht said.

Hecht pointed out that the bill does not prohibit hostile takeovers of electric utilities, it merely sets policy for the PUC consideration of such a proposal.

He said the unique nature of electric utilities leads to the need for this legislation. "Investor-owned utilities are private, for- profit businesses with a public purpose. First, electric utilities provide a necessary service to their customers. Second, today most users have no alternative supplier," he said. "Therefore, it is important that the legislature set public policy for the PUC to administer and follow in the case of a proposed hostile utility takeover."

PP&L Resources' top executive also said the reimbursement of defense costs provision of the bill is particularly important to protect the public interest. The legislation also would prohibit any of the costs of a hostile takeover attempt from being charged to utility ratepayers, Hecht pointed out.

"These provisions concerning the costs of hostile takeovers are entirely appropriate considering the fact that the target company, its shareowners and its ratepayers did not initiate any action," said Hecht.

Hecht was one of several witnesses scheduled to testify before the committee Monday.