The Idaho Public Utilities Commission (PUC) has approved the merger of Washington Water Power Co. with Sierra Pacific Power Co. and its corporate parent, Sierra Pacific Resources. Pursuant to the terms of the merger agreement, the surviving entity will become Resources West Energy Corp., a Nevada corporation authorized to conduct business in Nevada, Washington, Oregon, California, and Idaho.The utilities estimate that the merger will save ratepayers $514 million over a 10-year period, with nearly half the savings attributable to reductions and alterations in workforce. Purchasing economies in the gas market and reduced capacity requirements related to differing peak periods among the companies will account for most of the balance of the projected savings. The companies also allege that the low cost but static growth forecast for Washington Water Power, coupled with the strategic location to new markets and the actual growth in existing markets experienced by Sierra Pacific, will give the merged company an enhanced position in the "increasingly competitive" marketplace.

In approving the merger, the PUC adopted a settlement agreement calling for a rate freeze extending through the end of 2001, but reduced a proposed earnings cap from 12.5- to 12-percent return on equity. The PUC said the protections were needed to ensure that the benefits of Water Power's low-cost supplies are not lost to other jurisdictions as a result of the merger. The PUC stipulated that: 1) the company furnish semiannual reports on the financial effects of the merger, including any revisions to cost allocations, 2) shareholders bear the risk of making the new company whole in spite of differing cost-allocation methods between the utility's several operating jurisdictions, and 3) the merger can be rescinded if any merger-related orders issued by other jurisdictions contain provisions more favorable to ratepayers of those jurisdictions. Re Washington Water Power Co. et al., Case Nos. WWP-E-94-7; WWP-G-94-4, Order No. 26122, Sept. 19, 1995 (Idaho.P.U.C.).

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