Sierra Pacific Moves Closer to PGE Acquisition
Salem, OR-based Sierra Pacific Resources, the Oregon Public Utility
Commission, industrial customers and consumer groups reached a tentative
settlement last week that allows Sierra Pacific to acquire Portland General
Electric. The agreement calls for a six-year freeze on certain electricity
prices and a $95 million credit price for PGE customers over the next seven
Sierra Pacific last year announced it would acquire PGE, a wholly owned
subsidiary of Enron Corp. for $2.1 billion, excluding debt (see NGI,
Nov. 15, 1999). PGE provides electricity
to more than 700,000 customers in the Portland-Salem area.
In papers filed last week with the OPUC, Sierra Pacific, OPUC staff,
the Citizens' Utility Board of Oregon and the Industrial Customers of Northwest
Utilities recommended that OPUC adopt the settlement. Terms and conditions
of the agreement establish that the approval would be in the public's best
interests. OPUC is expected to rule on the agreement within a few weeks.
Already, Sierra Pacific has obtained approval from the U.S. Department
of Justice and the Federal Trade Commission. It also is awaiting approval
from the Federal Energy Regulatory Commission and the Securities and Exchange
Settlement conferences lasted five months, and at the heart of the agreement
are provisions to ensure that Sierra Pacific has an incentive to achieve
the "maximum possible efficiencies and savings" from integrating
the two companies to benefit all of its customers in Oregon, Nevada and
California. The settlement also provides rate credits that offer immediate
benefits for PGE customers. Among conditions of approval are the following:
A six-year price freeze on distribution, customer services and transmission
services for PGE from Oct. 1, 2001 through Oct. 1, 2007. PGE may adjust
prices in response to changing wholesale electricity costs and the amount
the company pays for fuel to power its generation plants.
A $96 million acquisition credit on customers' bills that will begin
as soon as the transaction is complete and extend through Sept. 30, 2007.
PGE's and Sierra Pacific's agreement to continue a leadership role
for Oregon's electric restructuring legislation, Senate Bill 1149.
Sierra Pacific will offer 30 different customer protections to guarantee
service quality and reliability.
Carolyn Davis, Houston
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