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The name game.

Two of Indiana's largest utilities--Indiana Bell and PSI Energy--look to operate with new names.

Analysts may look back upon the last three months of 1992 and the first six months of 1993 as an epochal era in the history of Indiana's utility industry.

During that relatively short period of time, the state's utility landscape changed as much as it's changed in the past 50 years. Among other things, two of the state's largest electric utilities engaged in an epic takeover battle. Also, Indiana Bell, the state's largest telecommunications utility, practically ceased to exist under the name customers had known for years.

The state's biggest utility news began to unfold in December, when PSI Resources Inc., the holding company for Plainfield-based PSI Energy, announced that it was planning to merge with Cincinnati Gas & Electric Co. The PSI/CG&E merger would create the nation's 13th largest electric utility.

According to the merger plan, the two utilities would create a Cincinnati-based holding company which would oversee operations in both Ohio and Indiana, Jackson Randolph, the CEO of CG&E, was to have taken the helm for a time before handing the reins over to James Rogers, PSI's CEO.

PSI expected opposition to its plan, most notably from IPALCO Enterprises, the holding company for Indianapolis Power & Light Co. But PSI expected that IPALCO might file as an intervener in the formal hearing process on the merger, to be conducted later this year by the Indiana Utility Regulatory Commission.

What PSI didn't expect was what actually happened. On March 15, IPALCO Enterprises announced it was mounting an unsolicited takeover bid for PSI. The Indianapolis utility estimated that the combination of the two utilities could achieve cost savings of $1.6 billion over 10 years, more than twice the estimated $750 million savings from the combination of the Plainfield and Cincinnati utilities. IPALCO's hope was that it could save by deferring construction of a new generating plant in Southeastern Indiana until sometime after the turn of the century.

PSI issued its formal rejection of the bid by IPALCO and launched a media campaign asserting that the IPALCO plan would be a bad deal for everyone, especially customers, costing them $4 billion over 40 years. Analysts expect the increasingly heated battle could take quite some time to play out, considering a hostile utility takeover in California took years to resolve.

Another more significant change in Indiana utility business during the past year involves Indiana Bell, the local operating company of "Baby Bell" Ameritech. For the most part, Ameritech plans to drop the Indiana Bell name and market services under its own name.

Tom Reiman, Indiana Bell's president and CEO, explains that Ameritech began investigating the change in April 1992. "The goal was to figure out how our customers best wanted to do business with us," he says, explaining that Ameritech "inherited geographic units from the old Bell system."

Reiman says that Indiana Bell has made the transition from assessing customer needs to grouping customers. That task accomplished, "How do we organize our business to best serve those needs?" Reiman asks rhetorically.

Indiana Bell and its sibling Ameritech companies answered that question by splitting up business into 11 market units that will serve customers under the Ameritech name. Those market units will include all of the traditional markets that Indiana Bell has served: residential customers, Yellow Pages, small business customers, pay telephones and the like.

One good example of the market segmentation arising out of the plan is Ameritech's push to serve work-at-home customers. Reiman calls the home-office segment "a hell of a fast-moving, largely ignored part of the marketplace. It's a super market opportunity for us."

Reiman notes that the new names are "internal identifiers. We're going to market as Ameritech." He adds that "Indiana Bell will remain the legal entity," since debt has traditionally been issued in the Indiana Bell name, "and we still have regulatory requirements."

A lawyer who worked with AT&T Longlines in Atlanta and New York City before stints with Michigan Bell and Ameritech in Chicago, Reiman came to Indianapolis with Indiana Bell in 1986. He was named the company's 17th president just under a year ago.

"We're here to please," Reiman says. He points out that focus group marketing discovered that most of the company's customers didn't know who or what Ameritech was. "They knew Indiana Bell," he adds, "but most of our customers thought we were owned by AT&T."

Reiman calls the landmark change in marketing focus "portability of good will." He acknowledges that the plan is an attempt to change the culture of the company to one of service. "We're trying to build a concept of Team Ameritech," he says. "That name that suited us well for 100 years doesn't necessarily serve us in the future."

The company is almost finished naming the heads of the market units and will roll out the new entities beginning this summer. Reiman says his timetable is to have everything in place by January of next year.
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Title Annotation:merger plan of PSI Energy Inc. and Indiana Bell Telephone Company Inc.'s preference to use Ameritech Corp. name
Author:Beck, Bill
Publication:Indiana Business Magazine
Date:May 1, 1993
Previous Article:Big is not so bad.
Next Article:Profiting by selling less.

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