FERC yesterday gave Sierra Pacific Resources (SPR), parent ofSierra Pacific Power and Nevada Power, the go-ahead to acquirePortland General Electric (PGE) from Enron Corp. The marriage,which is expected to close during the first quarter of 2001, stillmust be approved by the Securities and Exchange Commission (SEC).It also gave the green light to a proposed partnership venturebetween New Orleans-based Entergy Corp. and privately held KochIndustries Inc. to be called Entergy-Koch L.P.

This deal also is awaiting SEC approval. Analysts predict the $1billion venture, which will include “selected assets” of the twocompanies, will become a North American and European powerhouse inelectricity and gas, gas transmission and weather derivatives.

Last July, the Commission put the Sierra Pacific-PGE merger onhold while it established further procedures to address thecompetitive concerns that it had with the proposed transaction —specifically its impact on Sierra Pacific’s destination market andits effect on market-clearing prices in the California powermarkets.

In its Tuesday order, FERC ruled that the merger partners “haveaddressed these issues…..and have offered mitigation measures toaddress potential anti-competitive effects of the proposed merger.”

After owning the utility for just two years, Enron announced itsdecision to sell PGE to Sierra Pacific last November, due in part tothe adverse regulatory changes in the California and Oregonmarkets. (see Daily GPI, Nov. 9,1999). Enron’s asking price was $2.1 billion, including $2.02billion in cash and the assumption of Enron’s $80 million PGE mergerpayment obligation. Sierra Pacific also will assume $1 billion in PGEdebt and preferred stock.

Meanwhile, the proposed Entergy-Koch venture is expected to beamong the nation’s top 10 energy commodity traders, trading physicalvolumes in excess of 100 million MWh of electricity annually and 5 Bcfof natural gas daily, according to the two companies (see Daily GPI,April 25).

The new venture, once completed, would include the capabilitiesof Koch Energy Trading, Koch Gateway Pipeline’s interstatetransportation system and related gas storage assets. It also willinclude Entergy’s power marketing and trading businesses.

FERC said Koch and Entergy would not merge as a result of thepartnership, but rather would maintain separate corporateexistences. Subsidiaries of the two companies not contributing tothe venture will be unaffected by the transaction, it noted.

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