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News Digest

Mergers & Acquisitions
Fortnightly Magazine - May 15 2000

served previously as chief economist and director of the office of economic policy at the FERC. His team will submit semi-annual reports to the commission.

Lyonnaise + United Water Resources. Connecticut regulators OK'd the acquisition of United Water Resources Inc., the nation's second-largest water services company, by Lyonnaise American Holding Company Inc., a subsidiary of the French company Suez Lyonnaise des Eaux.

NEES + EUA. Regulators in Massachusetts OK'd the merger between New England Electric System and Eastern Utilities Associates.

Distribution rates will be capped for five years, through February 2005. Then rates would be adjusted annually, through 2009, using an index of average distribution rates in New England, New York, New Jersey, and Pennsylvania.

Leveraged Buyouts. In reviewing Warren Buffet's leveraged buyout of MidAmerican Energy Holdings Co., the Iowa board declined to attach conditions to protect utility ratepayers from the cost of any acquisition premium, which some say could exceed $1 billion. It said the question was best left to a future rate case.


Power Plants

Nuke Plant Premium. The New York Power Authority trustees on March 28 approved the sale of NYPA's Indian Point 3 and James A. FitzPatrick nuclear power plants to Entergy Corp. of New Orleans for $967 million, a record for the United States nuclear industry. The payment of $536 per kilowatt is almost four times greater than the previous high for a nuclear plant transaction and is comparable to those for recent sales of fossil-fueled power plants.

Hydro Expansion. Claiming that there are 21,300 megawatts of potential hydropower that could be developed without building a single new dam, Rep. John Shadegg (R-Ariz.) said that the future of hydropower rests in its expansion.

"Hydropower will only survive if it expands; otherwise, the loss of generation capacity in each license renewal will slowly but surely reduce the amount of hydropower produced," he said, addressing the National Hydropower Association's annual conference on April 4.



QF Contracts. A federal appeals court ruled that federal law does not preempt electric utilities from enforcing a "regulatory-out" clause against qualifying cogeneration facilities (QFs) to require a renegotiation of the price of power if regulators later bar the utility from recovering the cost of power purchased from the QF.

Emissions Allowances . A federal appeals court ruled that an industrial customer of an electric utility did not qualify under the Clean Air Act as a "joint owner" of a utility power plant, and thus was not entitled to receive a share of emissions allowances, because the customer had not reserved energy from a specified generating unit, nor agreed to pay a proportional amount of unit-specific operating costs.

Outage Liability. A Texas appeals court affirmed a trial court decision granting class action certification for customers of Entergy Gulf States Inc. in connection with power outages triggered by a January 1997 ice storm.

Gas Manufacturing Sites . An Illinois appellate court affirmed a circuit court's ruling in favor of four families who lived near the site of a former gas manufacturing facility and who sought compensatory and punitive damages for negligence and nuisance