The Federal Energy Regulatory Commission has approved the merger of Public Service Co. of Colorado and Southwestern Public Service Co. to create "New Century Energies" (Docket Nos. EC96-2-000 and EC96-2-001).
In a separate order, the FERC has approved the open access transmission tariff for Southwestern Public Service, Public Service Co. of Colorado, and its subsidiary, Cheyenne Light, Fuel and Power Co. (Docket No. ER96-2572-000).
Public Service Co. of Colorado and Southwestern Public Service Co. had filed an unopposed settlement agreement. The FERC approved the agreement's "hold-harmless" provisions, in which the utilities agreed not to allow the merger to affect wholesale or transmission base rates for five years. Specifically, in any base rate increase proceeding during the first five years after the merger closes, the utilities will not request recovery of any merger-related costs incurred through the first two years after the merger's closing date, unless merger-related benefits offset such costs. The companies will amortize over five years the merger-related costs incurred before the end of the first two years after the merger closes. Rate recovery for new interconnections will be allowed. The commission will address the method of rate recovery later.
Because the merger applicants are not interconnected, they proposed to construct by 2001 a 300-mile, 345-kV transmission line, and a 400-MW DC intertie between their systems. Also, the FERC had expressed market power concerns that existing constraints limited transmission across SPS's system to the West. However, those concerns were mitigated because the settlement provided procedures for an open-study process.