Madison Gas and Electric Co. (MGE) has asked the Federal Energy Regulatory Commission (FERC) not to approve the proposed merger of Wisconsin Energy Corp. (WE) and Northern States Power Co. (NSP) to form "Primergy." MGE claims that the merger would not only subject Wisconsin's electric consumers to higher prices, but severely impair competition.
According to Mark Williamson, MGE senior vice president of energy services, the Primergy merger would create market concentration in generation and transmission, resulting in market power abuses and anticompetitive conduct. According to MGE, market analysis using Primergy's own computer simultion models reveals that Primergy could increase prices by 5 percent or more for up to one-half of all sales to nonaffiliated eastern Wisconsin utilities.
FERC staff have also filed testimony concluding that Primergy raises market concerns, and that mitigation measures offered by the applicants are insufficient. Staff recommend that approval be conditioned on: 1) divestiture of some or all of WE's generating plants; or 2) establishment of an independent system operator with widespread membership. The Wisconsin Public Service Commission finds these conditions consistent with its own electric restructuring decisions.
Meanwhile, a coalition of environmental groups has asked for a cap on power-plant emissions from the two utilities as a condition of merger approval. The coalition believes that Primergy's ability to compete in its market area using older plants that were grandfathered with respect to Clean Air Act requirements would unfairly disadvantage new market entrants, which must meet stricter air-quality standards. (em LB