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Northwest Natural’s PGE Deal Criticized by Industrial Group
In what could turn into another problem for bankrupt Enron Corp., a group representing 32 Pacific Northwest industrial customers has asked FERC to conduct a more thorough analysis of Northwest Natural Gas Co.’s planned acquisition of Enron affiliate Portland General Electric (PGE).
The group charges that the deal could reduce competition in the region’s natural gas transportation and power markets. Northwest Natural and Enron agreed to the $1.8 billion cash and stock transaction in October two months before Enron declared bankruptcy (see NGI, Oct. 8, 2001).
In a filing submitted in mid-December to the Federal Energy Regulatory Commission, the Northwest Industrial Gas Users (NWIGU) said the “acquisition of Oregon’s largest retail electric service provider…and Oregon’s largest natural gas utility by a common holding company creates the very real potential for the exercise of market power.”
The group said the consolidation of the two companies, expected to be completed in the third quarter of 2002, could “result in an increase in market power in newly evolving energy markets,” and said the vertical integration of gas supply with electric generation could leverage “the control of gas transportation and storage into higher prices for electric energy bought and sold” in the Pacific Northwest.
Northwest Natural, noted the NWIGU, holds “significant vintage-priced capacity” on Northwest Pipeline Corp.’s system, and the newly merged company would eventually hold 43% of mainline transportation capacity on the system. The NWIGU also charges that increased access to Northwest Natural’s storage and gas delivery system could give PGE a “competitive advantage over independent power producers.”
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