States Squabble Over Sierra Pacific Merger

Fortnightly Magazine - April 1 1996
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While it has lifted a stay that had delayed approval of the merger between Washington Water Power Co. and Sierra Pacific Power Co., the Washington Utilities and Transportation Commission (UTC) has rejected the use of "single-system pricing" to average costs between divisions in the new company, Resources West Energy Corp. The stay had allowed regulators in Washington and Nevada to consider separate settlement offers and hold joint hearings on the merger.

Washington Water Power (operating in Washington and Idaho) offers some of the lowest utility rates in the country, while Sierra rates run much higher. Thus, a single system rate would harm Idaho and Washington ratepayers, the UTC said. At one point word came out in the Washington proceedings about discussions in Nevada on single-system pricing. That debate, said Washington regulators, "makes us very nervous about future dealings on allocation issues." The UTC responded that since single-system pricing information in any other jurisdiction affects allocation of system costs to the detriment of Washington ratepayers, it would refuse to reflect the allocation in Washington results of operation for any purpose. In that case, the UTC said, the shareholders of the two merger applicants would bear the risk for any difference if costs were made unrecoverable. Re Washington Water Power Co., Dkt. Nos. UE-941053; UE-941054, Dec. 5, 1995 (Wash.U.T.C.).

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