The Idaho Public Utilities Commission said Friday it has approved the merger of Utah Power & Light Co. with PacifiCorp, contingent on rates not increasing for Idaho customers of the two utilities.
PacifiCorp, the parent corporation of Pacific Power & Light Co., has been seeking approval of a merger with the Salt Lake City-based UP&L."The merged company will offer substantial benefits to its customers under the conditions imposed and with ongoing commission supervision," said PUC President Joe Miller.
In an order issued Friday afternoon, the commission noted that company officials are committed to substantial reductions in UP&L rates and rate stability for PP&L customers after the merger.
Pacific Power & Light has about 9,000 Idaho customers in the Sandpoint area. Overall, it operates in six Western states and has annual revenue of more than $1 billion.
UP&L operates in three states, has annual revenue just under $1 billion and serves 41,000 customers in Idaho. Its Idaho service area is mainly in rural areas along the eastern border of the state.
"The merged company will benefit from the diversity of Pacific Power's and Utah Power's loads," the commission said. Combining UP&L's system, which has its greatest demand in summer, with PP&L's winter peaking system could reduce the need for generating capacity by 436 megawatts, the PUC said.
Integrating the companies' generation and transmission systems would create other efficiencies, the order said. By intertying the systems, less-costly power can be moved where it is needed.
"Furthermore, the combination of the two companies' transmission systems is advantageous, giving the merged company access from the Pacific Northwest to California, from Idaho and Wyoming to the Inland Southwest, and from Wyoming to the Northern Plains states," the PUC said.
"This system is well situated for purchases, sales and exchanges with other utilities," it said.
Shortly after the proposal was announced, PP&L President Dave Bolender said the "synergies" of combining the two systems would save $50 million to $150 million per year. The PUC said he promised that UP&L's Idaho rates would be reduced by 2 percent within 60 days after the merger, and 5 to 10 percent within four years. The promise also stated that PP&L's rates will not increase over the same period.
"A promise of rate reduction or of rate stability is insufficient, in itself, to obtain our approval of this transaction or of similar transactions that may be proposed in the future," the PUC said.
"We have no doubt that such promises, although well-intentioned, are in part the result of a political or public-relations strategy perceived by advocates as necessary to generate ratepayer support for the proposed merger.
"Our decision in this case must be, and is, based on an objective appraisal of the merits of the merger," the PUC said.