FirstEnergy Corp. plans to acquire Allegheny Energy Inc. for $4.7 billion in a stock deal that would enhance its operational ability through the creation of a big regional utility but this could encounter resistance from states unless it yields local benefits.

The above stated transaction is long awaited but the process of materializing is quite slow in the utility sector as the company has to persuade state regulators, who often have resisted mergers because of concerns as job cuts and reduced maintenance spending, that the combination offers something to customers.

According to the company merger could save the top $530 million by the fifth year, as the costs, would be shared with the customers, subject to negotiations with state utility commissions.

Anthony Alexander, chief executive of FirstEnergy and slated to head a combined firm, said in an interview that the combined company would have a stronger balance sheet and should have easier access to capital. "This will add to our financial strength”

He also stated that combination wouldn't diversify the companies away from coal, which has been criticized because of climate-change concerns. The new company, which would retain the FirstEnergy name and be based in Akron, Ohio, would be 70%-dependent on coal for power generation, although 70% of that production would come from modern coal units that have been outfitted with scrubbers to cut emissions.