Cooperatives and Regulation and Electric and Hancock County and Telecom and Regional News and Energy & Environment and Utilities

Hancock County utilities set to proceed with merger

November 3, 2010

A merger of two Hancock County utility cooperatives is set to become official Jan. 1 after members of each voted on Saturday to approve the consolidation.

The joining of rural Central Indiana Power and Hancock Telecom may not seem unusual, particularly because the two small coops pursued the marriage in hopes of saving money.

“There’s a lot of fixed overhead that is costly when you have a relatively small customer base,” said Mike Burrow, Hancock Telecom’s vice president and general counsel.

But it took a change in state law to allow for a merger between coops that offer different services. Moreover, it’s just the second merger of its kind in the United States—the other occurred in remote Dillingham, Alaska.

Indiana law previously prevented what was known as a “hybrid” merger between rural telephone and electric utilities. Central Indiana Power and Hancock Telecom recruited the Indiana Statewide Association of Rural Electric Corporations and the Indiana Exchange Carriers Association to lobby on their behalf.

The legislation, which became effective July 1, cleared the Senate unanimously, 50-0, and the House by a nearly impressive margin of 99-1.

Details of the merger call for Central Indiana Power to be rolled into Hancock Telecom, though no money exchanged hands in the transaction, Burrow said.

Directors of both decided to fold Central Indiana Power into Hancock Telecom mainly because of the federal and state telecommunications licenses the telephone, broadband and IP video services provider would have to re-apply for if it became part of another company.

The board is working on a new name for the combined entity.

Hancock Telecom has 79 employees, and Central Indiana Power has 33. No employees are slated to lose their jobs due to the merger, Burrow said.

Cost savings could come from Central Indiana Power’s use of Hancock Telecom’s 24-hour call center. The electric utility currently uses a Minnesota company, which routes after-hours calls to the utility. Also, Hancock Telecom could use Central Indiana Power’s linemen to run fiber-optic lines on power poles, Burrow said.

“It’s not something you see very often, the mixture of two utilities,” he said.

Both companies will keep their separate locations, which are about six miles apart. However, within the next three to four years, directors likely will begin exploring the possibility of either building a new facility or leasing space to house employees under one roof, Burrow said.

Roughly 85 percent of Hancock Telecom and more than 83 percent of Central Indiana Power members who attended the meeting on Saturday voted in favor of the consolidation.

Founded in 1936, Central Indiana Power serves nearly 12,000 customers in Hancock, Madison, Hamilton and Rush counties.

Founded in 1895, Hancock Telecom has 9,000 customers in Hancock, Hamilton, Henry, Madison, Rush and Shelby counties.
 

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