Foreign Acquisitions of U.S. Utilities Get FERC Nod
The foreign invasion of the U.S. electric utility market got a
big shot in the arm yesterday when the Federal Energy Regulatory
Commission approved two separate transactions valued at $10-$11
The Commission okayed ScottishPower's acquisition of Portland,
OR-based PacifiCorp for an estimated $7-$8 billion, as well as the
purchase by Britain's National Grid Plc, the world's largest
privately owned independent transmission company, of New England
Electric System (NEES) of Westborough, MA, for $3.2 billion. It
found that neither merger deal posed any market-power concerns.
"These transactions represent the first major mergers and
dispositions of U.S. public utilities and foreign companies that
have come before the FERC, yet they present little controversy,"
said Commissioner William Massey. "There are no competitive
concerns raised by the transactions because the merging partners do
not sell in the same geographic markets as the utilities they are
The growing foreign interest in U.S. utilities, Massey noted,
was to be expected. "U.S. companies have been increasingly active
in the foreign investment market. Investments by U.S. utilities
[have] exploded..... So it is no surprise that foreign companies
are taking an interest in U.S. assets as well."
In addition to FERC, the ScottishPower-PacifiCorp deal has been
approved by Britain's regulatory authorities. It still, however,
requires the necessary approvals from the Securities and Exchange
Commission and regulators in the six western states served by
PacifiCorp, which include Oregon, California, Washington, Utah,
Idaho and Wyoming.
The California Public Utilities Commission already has given a
nod to the deal, and the staff for the Washington Utilities and
Transportation Commission recommended on Tuesday that regulators
approve the merger next fall. In Oregon, where the merger faces its
biggest hurdle, the staff of the state's Public Utility Commission
said it is continuing to work with ScottishPower to reach a
settlement on key merger-related issues, which could clear the way
for a vote on the merger by either September or October.
The National Grid-NEES transaction still requires the nod of
state regulators in Massachusetts, New Hampshire and Rhode Island,
as well as clearances from the SEC and Nuclear Regulatory
Under both deals, the U.S. utilities - PacifiCorp and NEES -
would become subsidiaries of their respective foreign owners.
PacifiCorp serves about 1.4 million customers in the six western
states, while NEES and its utility affiliates serve 1.3 million
customers in the New England area.
Separately, FERC yesterday also approved the merger of Central
Illinois Light Co. (CILCO), a Midwest electric and gas utility,
with AES Corp., a major power generation and distribution firm with
operations worldwide. It concluded that the deal "will not
adversely affect competition" in their respective markets.
CILCO, a wholly-owned subsidiary of CILCORP Inc., provides
electric services to about 193,000 customers in central and east
central Illinois, and retail gas service to approximately 202,000
customers. It also owns coal-fired and gas-fired generation
AES is engaged principally in the development, ownership and
operation of electric generating plants and electric distribution
firms. It owns and/or operates a diverse portfolio of power plants
worldwide with a total capacity of 23,656 MW.