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Lilco, B'klyn Gas to merge
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December 30, 1996: 11:21 p.m. ET
$3B deal should help with big debts left from Shoreham nuclear plant
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) -- Brooklyn Union Gas Co. and the Long Island Lighting Co. (Lilco) agreed over the weekend to merge in a deal valued at $3 billion.
The merger could prove instrumental in lowering Long Island consumers' electric rates, currently some of the nation's highest.
The high rates stem mostly from Lilco's multibillion-dollar debt for the Shoreham nuclear-power plant, which public opposition prevented the utility from ever opening.
Environmentalists opposed the plant on safety grounds.
Some Long Island residents, led by Richard Kessel of the Long Island Consumer Energy Project, also argued that Shoreham didn't make good economic sense.
"Lilco and the industry (claimed) there was going to be blackouts and brownouts because we won't have enough power," Kessel said. "The irony is that today, we're awash in energy."
By the time Shoreham was decommissioned, the waterside structure had become a $5.5 billion albatross around Lilco's neck.
That prompted the utility to charge high electric rates.
Frank Zarb, chairman of the Long Island Power Authority, admitted that officials handled the situation badly. (124K WAV) or (124K AIFF)
No radioactive material remains at Shoreham, just a huge debt.
The state now controls the plant, and hopes the Brooklyn Gas deal will enable refinancing of the site's multibillion-dollar obligations at lower rates.
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