Lower power rates are likely the only result Utah consumers will experience following the merger of Utah Power & Light Co. and Pacific Power and Light, says Utah Public Service Commission Chairman Brian T. Stewart.
Stewart made that observation during a talk to the Farmington Rotary Club Thursday morning."We'll still make out our checks to Utah Power & Light and we will see most things happening just the same as they have in the past," Stewart said.
But the merger is a major event involving privately owned power utilities. Stewart said the merger was the first in the United States in nearly 50 years and is the "threshold" case for what is expected to be an avalanche of mergers over the next several years.
Already, two other mergers involving California and Arizona power companies have been proposed. Stewart said analysts expect the present 200 private power companies to consolidate and merge into as few as 50 by the turn of the century.
While Utahns are likely to see mostly good come from the merger, one element is considered negative by most observers, Stewart said. He said the merger agreement allowed the Federal Energy Regulatory Commission to exert authority over privately owned transmission lines for the first time, a factor he believes is an overstepping of authority by the federal government. He said the Utah PSC is very concerned over this aspect but decided not to fight the move because of the other benefits of the merger.
The federal approval of the merger requires the two utilities to make excess transmission capacity available to other utilities, including municipal power companies, without restriction. This is expected to make it easier for municipal power companies, UP&L and PP&L's chief competitors, to get access to surplus power in surrounding states, bypassing more expensive power offered by UP&L.
Stewart said the Utah PSC will keep close tabs on this element of the agreement.
Among the benefits to Utah customers will be an immediate 2 percent rate reduction that should be in place by March, to be followed by an additional 3 percent reduction over the next four years, Stewart said. Other savings are expected in power generation costs, because new power plants will not be needed for several years, and an improved ability to make surplus sales to other companies, a move that benefits ratepayers under a previous PSC order.