Southwest Gas of Las Vegas and Oneok Inc. of Tulsa, OK, received the blessing of Nevada’s Consumer Advocate and a Nevada state legislator for their proposed merger.

Fred Schmidt, the state consumer advocate in the Nevada Attorney General’s Office, said his office performed a preliminary evaluation of a competing offer for Southwest Gas by Southern Union, and concluded that, “we did not think they had the financial capability to pull off the offer that they put forward without substantially jeopardizing the current rate levels that customers pay in Nevada.”

Comments favoring the merger came during one of two consumer sessions conducted by the Public Utilities Commission of Nevada May 26 and 27. The sessions are part of the Commission approval process of the Southwest Gas-Oneok combination. Evidentiary hearings on the case are scheduled to start June 21.

State Sen. Randolph Townsend (R-Washoe), chair of the State Senate Committee on Commerce and Labor, which oversees all utility matters and the Public Utilities Commission, also addressed the hearing. “This merger will provide significant benefits to consumers as well as shareholders.”

Southern Union gained permission early last month to join an existing lawsuit against Southwest Gas in a last-ditch attempt to overtake Oneok as the winner in the race to merge with Southwest. The lawsuit accuses Southwest Gas’ board of directors of refusing to negotiate with Southern Union in good faith. None of the parties involved would comment further on the situation as of press time.

The original lawsuit was filed by Southwest shareholders in San Diego County’s Superior Court. Southern Union said the original lawsuit accuses the Southwest board of seeking only to protect itself during the past merger negotiations.

Southern Union is asking the court for permission to directly solicit Southwest’s shareholders to oppose the Southwest-Oneok agreement and to support Southern Union’s efforts to merge.

The combination of Oneok and Southwest gas, which was announced in December, would create the largest stand-alone gas distributor in the United States, followed by Columbia Energy (see NGI Dec. 21, 1998). Oneok-Southwest would be the fourth largest gas and electric combination utility.

Joe Fisher, Houston

©Copyright 1999 Intelligence Press, Inc. All rights reserved.The preceding news report may not be republished or redistributed in wholeor in part without prior written consent of Intelligence Press, Inc.