Although problems in the power business grabbed the headlines early this decade, the industry now seems fundamentally strong. In contrast to their ratings of banks, rating agencies appear to have...
complaining that Allegheny Power "gets the milk without having to buy the cow - it gets to drink in profits from selling electricity to the citizens of West Virginia, without having to submit its activities to the scrutiny of the PSC." West Virginia Highlands Conservancy Inc. v. W.Va.P.S.C., No. 25048, 1998 WL 874963, Dec. 14, 1998 (W.Va.).
Property Taxes. A state court rejected a claim by the Institute of Nuclear Power Operations for a property tax exemption as a charitable organization, pointing to INPO's industry sponsorship and its $12 billion in annual profits. INPO was set up in 1979 to promote safety and reliability in nuclear plants. INPO v. Cobb County Bd. of Tax Assessors et al., Nos. A98A2077-A98A2084, 1999 WL 2650, Jan. 5, 1999 (Ga.App.).
Gas Transport Rights. Calling the commission's reasoning "too confused to pass muster," a federal appeals court reversed and remanded a FERC ruling that had denied Southern California Edison Co. the right to contest a gas pipeline rate settlement agreement both as a direct customer of the interstate pipeline, El Paso Natural Gas Co., and an indirect customer, via connections through Southern California Gas Co., an intrastate pipeline.
Edison argued that SoCal Gas would not represent its interests in the El Paso case, as SoCal easily could flow through rates to captive customers. The court agreed: "The commission's murmurings here are not enough to show substantial congruity of interests." So. Calif. Edison Co. v. FERC, No. 97-1450, 1998 WL 852544, Dec. 11, 1998 (D.C. Cir.)
Mergers and Acquisitions
ONEOK + Southwest Gas. Oklahoma-based ONEOK, Inc. and Nevada-based Southwest Gas Corp. have decided to merge to create the largest stand-alone natural gas distribution company in the United States, serving 2.6 million customers in five states. The merger was expected to close in fall 1999.
ONEOK would pay $28.50 per share (total value approximately $1.8 billion) to acquire Southwest Gas, which would retain its name in the local markets it serves, operating as a division within ONEOK. No layoffs are expected; any reductions should occur through attrition. Approvals are needed from Arizona, California, Nevada and the Federal Energy Regulatory Commission.
Nevada Power + Sierra Pacific. After tacking on several conditions to ensure the legislature's intent of promoting competition, Nevada regulators approved a merger to reorganize Nevada Power Co. as a wholly owned subsidiary of Sierra Pacific Resources.
One condition requires the parties to plan to divest certain generation plants and form an independent system operator to manage transmission service. A second condition stipulates that the merged entity must not become a registered holding company, which would preempt state authority over certain company transactions. Docket No. 98-7023, Dec. 31, 1998 (Nev.P.U.C.).
Wisconsin Power Market. Wisconsin regulators certified two new gas-fired simple-cycle combustion turbines, stemming from the PSC's Advance Plan 7 (under the review process in State Act 204), issued in September 1997, which had identified unmet needs for electric generating capacity.
RockGen Plant. A 525-MW unit, operating as a nonutility merchant plant to sell power at wholesale to Alliant Energy. Under the state's certification process for merchant plants,