Utah's Public Service Commission Monday approved the merger between Utah Power & Light Co. and PacifiCorp.
In a brief, one-page order, the three-member commission said time constraints and deadlines of the two companies required it to issue an opinion on the merger as soon as possible. The order said conditions of the merger as well as findings of fact and conclusions of law would be issued at a later date."We are extremely pleased that commission has taken the bull by the horns and acted this quickly," UP&L spokesman John Ward said.
Utah becomes the fifth state to approve the $1.8 billion merger, which would create a utility serving more than 1 million customers in seven western states. Washington and Oregon have yet to issue their rulings on the merger.
Another reason for the rushed opinion from Utah's PSC is to send a signal to federal regulators to reconsider an initial federal ruling opposed to the merger.
A Federal Energy Regulatory Commission administrative law judge in Washington, D.C., last month blasted the merger in a 250-page opinion, listing 96 reasons not to approve it and not a single statement supporting it. The judge's recommendation not to approve the merger, which threw a major stumbling block in the way of UP&L and PacifiCorp's meeting an Aug. 12 deadline to complete their merger, surprised regulators and observers nationwide.
The FERC will take Judge George Lewnes' recommendation into consideration before making its final ruling on the merger.
"We don't mind sending a signal to FERC that we are joining other states in supporting this thing," PSC chairman Ted Stewart said. Regulators in Idaho, Wyoming, Montana and California have also approved the merger.
He said the FERC should consider the judge's initial conclusions "dubious," in view of support for the merger from five state commissions, and possibly seven.
"This commission's approval combined with all the other state commissions who have had lengthy and detailed hearings speaks well of the merger's benefits and will help us as we press forward for federal approval," Ward said.
Utah's Division of Public Utilities has filed a brief with the FERC, as has the FERC's legal staff. Both take exception to Lewnes' decision, particularly Lewnes' finding that the merger benefits had not been adequately demonstrated.
UP&L and PacifiCorp, the Oregon-based parent of Pacific Power & Light Co., say claim their marriage would result in $500 million in savings in the first five years through operating efficiencies, and those savings would be passed on in rate reductions of 5 percent to 10 percent for UP&L customers.
Stewart said the PSC's forthcoming order would request that UP&L and PacifiCorp guarantee the rate reductions, which would begin with an immediate 2 percent decrease, as a condition of approving the merger.
He said other conditions deal with regulatory rule issues that the two utilities have previously agreed to comply with.
"We haven't required anything that would kill the merger," Stewart said.