The Iowa Utilities Board (IUB) gave its blessing to the proposedmerger of MidAmerican Energy Holdings Co. and CalEnergy Co. Inc.last week, removing the final regulatory hurdle to a transactionthat will combine and complement the assets and expertise of a U.S.utility with those of a United Kingdom utility. The deal isexpected to be completedon Friday.
Also clearing the merger path was CalEnergy’s completion of thesales of various ownership interests in qualifying facilities,which FERC ordered in December as part of its decision approvingthe merger. CalEnergy has sold half of its ownership interest in CEGeneration LLC, the holding company for its 14 U.S. generatingfacilities, to El Paso Energy, and all of its ownership interestsin its Coso geothermal power projects to Caithness Energy LLC.
The transaction is unusual in that it marks the first time thatan independent power producer (IPP) will acquire a utility, saidMidAmerican spokesman Kevin Waetke. Notably, it combines a leadingregional provider of energy and related services to 1.3 millionelectric and gas customers in Iowa and neighboring states(MidAmerican), with a global energy firm that manages and ownspower generation facilities and other energy assets in the UnitedStates, Europe and elsewhere, and distributes electricity and gasto 2 million customers in the United Kingdom (CalEnergy).
Des Moines, IA-based MidAmerican will bring its knowledge of theU.S. utility market to the new company, while CalEnergy willcontribute its expertise on operating a gas and electric utility inthe U.K.’s deregulated environment, as well as its “aggressivegrowth” in global energy markets, the merger partners said.
The combined company will have estimated assets of $11 billion,total revenues of over $4.4 billion and will serve more than 3.3utility customers in the U.S. and U.K. In addition to its utilitysupply and distribution business in the U.K., CalEnergy ownsgeothermal facilities for producing electricity, gas-firedcogeneration facilities, is involved in gas exploration in theNorth Sea, and produces hydroelectric power. MidAmerican, on theother hand, is parent of the largest utility in Iowa, MidAmericanEnergy, and is involved in gas marketing, as well as a number ofnon-energy related businesses.
Under the merger deal, MidAmerican will become a wholly ownedsubsidiary of CalEnergy. Then CalEnergy-which currently isincorporated in Omaha, NE – will be re-incorporated in the state ofIowa and will be renamed MidAmerican Energy Holdings Co.
David Sokol, chairman and CEO of CalEnergy, will continue inthis role in the combined company; Stanley Bright; chairman,president and CEO of MidAmerican, will become vice chairman of theboard and a member of its executive committee. Greg Abel will bepresident and COO of the merged company.
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