Oneok said last week that it remained steadfast in its desire tomerge with Southwest Gas, even in the face of a recommendation bythe Arizona Corporation Commission (ACC) staff to delay thetransaction. The Oklahoma-based company said the ACC staff decisionwas swayed by a “spurned suitor” and although no names arementioned, Southern Union Co. is the likeliest candidate for thespoiler role. Southern Union is bound by court order not to discussthe merger.

A hearing on the proposed marriage is scheduled for Feb. 11.David Kyle, Oneok’s president, said that many of the ACCstaff-recommended conditions have already been settled.Additionally, the deal has been approved in Nevada, it has beenrecommended for approval in California, and it has been approved bythe Southwest Gas board of directors.

The staff recommendation was made in testimony presented to theACC on Jan. 4. It said ongoing litigation between Southern Unionand Oneok concerning the merger, and Oneok’s “poor safety record ascompared to that of Southwest Gas,” prevented a recommendation. “Werecognize that the ACC staff has some concerns, but we areconfident in our ability to resolve those concerns, especiallysince many of them appear to be based on false and misleadingstatements made by people who had their merger proposals rejected,”said Kyle.

Kyle pointed to Arizona Residential Utility Consumers Office(RUCO) testimony filed on Jan. 4 to demonstrate the advantages of aSouthwest-Oneok union. The RUCO, which is charged with safeguardingthe interests of Arizona utility ratepayers, testified that theterms of the proposed merger include an immediate $5 million creditto Arizona ratepayers, as well as the opportunity for ratepayers toshare in “any other additional savings it [Oneok] may be able togenerate.” The transaction also protects Arizona ratepayers frombearing any of the $30 million in costs associated with completingthe merger, and from future rate increases that are unrelated toOneok’s Arizona natural gas business.

“It is unfortunate that a spurned suitor has been able totemporarily delay a merger that will benefit Arizona ratepayers,”Kyle said. “But we know that..the allegations are false. Oneok hasdone nothing wrong and we will prove just that.”

Southern Union has been fighting the merger ever since Southwestaccepted Oneok’s bid last April (see Daily GPI, April 27, 1999).Southern Union offered to by the company at a higher price, butSouthwest chose to stay with Oneok, siting complex regulatoryhurdles in a potential Southwest-Southern Union marriage.

Attempting to stall the merger whenever and however possible,Southern Union has gone to the courts in Arizona and California.Although many of its litigious ventures failed, Southern Union hashad success in Arizona, where charges of tampering have not onlydelayed the merger, but also led to the investigation of Jim Irvin,an ACC commissioner (see Daily GPI, May 5, 1999).

John Norris

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