The Federal Energy Regulatory Commission (FERC) has set for hearing the proposed merger of Public Service Co. of Colorado (PSCC) with Southwestern Public Service Co. (SPS), directing that an initial decision be issued by January 31, 1997 (Docket No. EC96-2-000). The companies propose to interconnect by 2001 by constructing a 300-mile,
345-kilovolt transmission line, and to create a new registered holding company, temporarily called
"M-P New Co."
The FERC observed that the June 26 order does not reflect the outcome of its ongoing inquiry into its 30-year-old Commonwealth criteria for evaluating utility mergers. When the FERC does act in that inquiry, the parties and the presiding administrative law judge will be bound to take the new rules into account.
The FERC expressed concern about whether the proposed "hold harmless" provisions would adequately protect ratepayers, since they would expire before the parties become fully interconnected or the bulk of the merger savings are realized. The companies had proposed that for five years they would not seek a rate increase to recover any merger-related costs amortized during the first two years of postmerger operations and not offset by merger-related savings.
Citing concern about the merger's effect on bulk-power markets in the southwestern United States, the FERC also directed the parties to address whether the merger would affect competition, given transmission constraints on the SPS system.