The four-week hearing on the proposed merger of PacifiCorp and Utah Power & Light Co. was closely watched by the rest of the U.S. utility industry, which has been swept with talk of deregulation and increased competition.

"It's a stalking horse for the whole structure of the industry," said Dan Davidson, a Washington, D.C., lawyer representing the American Public Power Association and the National Rural Electric Cooperative Association.Davidson said the merger is the "lead case" for a number of hot topics in the industry, including mergers and how the Federal Energy Regulatory Commission would handle them, and whether the commission might move toward a policy requiring utilities to cooperate in "wheeling" electricity from one region to another.

An administrative law judge in Washington, D.C., last week quietly adjourned a hearing on the proposed $2.2 billion merger after four weeks of detailed testimony and complex cross-examination.

The merger, which would result in a utility serving 1.2 million customers in seven Western states, would be one of the largest since enactment of the Public Utility Holding Company Act in 1935.

Officials of Salt Lake City-based UP&L and of PacifiCorp, based in Portland, Ore., said they proved during the hearing that the merger would be an economic boon to their customers and that other utilities had nothing to fear.

"Everything seems to be on track and we're feeling pretty good," said Verl Topham, UP&L's chief financial officer and one of only eight witnesses who testified during the hearing.

Opponents of the merger, including more than 20 public and private utilities and industry groups from South Dakota to Arizona, also said they successfully proved their point that the merger would create a super utility dominating Western markets and exercising an iron grip on transmission lines from the Northwest to the Southwest.

"I think we are satisfied with the way the hearings went," said Don Allen, a Washington, D.C., lawyer who represented the Colorado River Energy Distributors Association.

The FERC administrative law judge has until June 15 to make a decision on the merger. The decision will be reviewed by the full commission.

Still to come are hearings by state regulatory agencies in Oregon and Utah.

UP&L serves about 510,000 customers in Utah, Idaho and Wyoming.

Pacific Power & Light, PacifiCorp's utility subsidiary, serves about 670,000 customers in Oregon, Washington, California, Idaho, Montana and Wyoming.

"This was the sixth regulatory hearing we've gone through, and we've heard most of the arguments before," Topham said of the FERC hearings.

Topham spent six days on the witness stand, much of it answering questions about whether the merged utility would allow other utilities to use its transmission lines to ship electricity.

Officials of both PacifiCorp and Utah Power sought to assure the law judge that competitors would be able to "wheel" power over the merged utility's lines, but there was a hook.

Topham said that if the merged utility lost a power sale of its own because it was transmitting power for another utility, it would want to be compensated.

The concept, known as "lost opportunity compensation," is a relatively new one in the utility industry, and Topham said it reflected the "changing world."

Opponents, however, said that if PacifiCorp and UP&L are allowed to combine their transmission systems, the new company would have a virtual lock on a vital link to lucrative energy markets in Southern California and the desert Southwest.

Allen said the situation was best described by an official of a small utility member in the Colorado association, who said, "It's as if you and I own the only two gas stations in town and you just bought all the roads. How do you think I'd feel?"

Davidson said the proposal for "lost opportunity compensation" was just an "exercise in monopoly power that isn't good enough. There are no guarantees they will wheel."

Some opponents would like to see the merger quashed outright, while others, at a minimum, believe some conditions should be attached to ensure the merged utility doesn't become a monopoly.

"With a few exceptions, the intervenors who have played the largest role in this were our direct competitors," said Frederic Reed, a senior vice president of Pacific Power, who spent three days on the stand.

Reed spent most of the time focusing on benefits the merger would provide to customers of UP&L and PacifiCorp, including about $500 million in savings over its first five years.

Reed said the merger would allow the two companies to reduce costs, improve efficiency and stabilize or reduce rates.

Company officials have previously said the merger would result in stable rates for PacifiCorp's customers and a drop of 5 percent to 10 percent in UP&L rates.

"The strategy was to make the best possible showing in terms of benefits, favorable impacts on our customers and the fact the merger is not anti-competitive," Reed said. "We well withstood the challenge of cross-examination."

But Allen disagreed, insisting, "We are talking about two multibillion-(dollar) companies, and the savings they are talking about are peanuts."

Allen said the companies were using "smoke and mirrors" to come up with their projected savings. More than anything else, he said, the merger was simply an attempt by PacifiCorp to gain increased access to energy markets in the Southwest.

"All the utilities are trying to get there," Allen said. "Why would Pacific want to buy a company with higher cost generation that is already surplus? The answer is simple: a transmission system."