No clear consensus has emerged. Should regulators hold to a hard line?
Regulators have wrestled for decades with transactions between vertically integrated monopoly utilities and their...
that require customers to buy from marketers to use pipeline capacity assigned to the distribution utility. r-00963858, March 19, 1998 (Pa.P.U.C.).
TORT LIABILITY. Vacating a prior ruling, the Pennsylvania Public Utility Commission has opened a new rulemaking case to consider policy on guidelines in tariffs that purport to limit utility liability for negligence or intentional torts. In a separate statement, Commissioner John Hanger endorsed the idea of protecting ratepayers from unlimited utility liability, but questioned whether such protection should extend to competitive services. He also questioned PUC authority, pointing out that the commission lacked underlying jurisdiction to set legal liability or to award damages in tort cases. m-00960882, March 11, 1998 (Pa.P.U.C.).
TELCO MERGERS. The Virginia State Corporation Commission approved the acquisition of Teleport Communications Group Inc., by AT&T Corp. The new affiliate will offer local exchange and interexchange services principally under the AT&T brand. Case No. 980004, March 30, 1998 (Va.S.C.C.).
Mergers & Acquisitions
TEXAS UTILITIES/ENERGY GROUP. Texas Utilities has emerged as the apparent victor in a tense bidding war for The Energy Group Plc, in the United Kingdom.
PacifiCorp's last bid was $9.7 billion, with Texas Utilities agreeing to pay $10.4 billion. PacifiCorp decided the purchase price was climbing too high after British regulators announced they would require both utilities to make sealed bid offers. But it cost PacifiCorp almost $200 million to attempt the purchase, a cost which will be picked up by stockholders. However, PacifiCorp has accumulated a large amount of cash that would have been used to make the purchase, which now makes PacifiCorp a prime takeover target.
In order for Texas Utilities to complete the deal, it will have to divest The Energy Group's subsidiary, Peabody Coal, the world's largest private coal company. Texas Utilities plans to sell Peabody to Lehman Merchant for $2.3 billion.
NEVADA POWER/SIERRA PACIFIC. Nevada Power Co. and Sierra Pacific Resources on April 30 announced their "merger of equals" to create a company with a total market capitalization of $4 billion.
The companies claim that combining Nevada Power (claimed to be the fastest-growing utility in the nation) with Sierra Pacific will create a company with annual customer and kilowatt-hour sales growth of 5 percent and 7 percent, respectively.
Sierra Pacific Resources would become the holding company for both utilities. Investors owning stock in Nevada Power or Sierra Pacific could trade their shares for cash or stock in the new combined company in ratios reflecting five-percent premiums on 10-day average stock trading prices through April 28.
Michael R. Niggle, Nevada Power's president and CEO, was slated to become chairman and CEO of the new holding company and chairman of its subsidiaries. Malyn K. Malquist, SPR chairman, president and CEO, would become president and COO of the holding company and president and CEO of both companies. The present chairman and CEO of Nevada Power, Charles A. Lenzie, would retire when the merger was complete.
A FIRST CO-OP DEAL. Licking Rural Electrification Inc., an electric cooperative based in Utica, Ohio, has announced it will acquire National Gas & Oil Co. for $93 million in cash