Two major opponents of the proposed merger of Utah Power & Light Co. with PacifiCorp have agreed to drop their opposition in exchange for several major concessions.
Idaho Power Co. and Montana Power Co. agreed to withdraw from the Federal Energy Regulatory Commission hearings on the merger being held in Washington, D.C., UP&L spokesman John Ward said.The two companies have contended the merged company would dominate the market for surplus power in the Southwest through its control of transmission lines in the Intermountain West.
Separate agreements with the two companies have been drafted but not yet signed, Ward said. The agreements were presented Friday to the administrative law judge presiding over the FERC hearings.
The opposition of Idaho Power and Montana Power to the merger "made life so difficult for UP&L and PacifiCorp that they finally decided to reach an accommodation," said Donald Allen, an attorney for the Colorado River Energy Distributors Association, a group of 117 consumer-owned utilities that also opposes the merger.
UP&L and PacifiCorp have made a series of concessions to groups that have opposed the merger, Allen said.
"I don't think they have been hurting us," Ward said. "But it always makes sense to resolve issues on your own when you can rather than litigating and hoping for the best from an officer of the court."
UP&L and PacifiCorp, the parent company of Pacific Power & Light Co., announced the proposed merger in August. The merger is contingent on approval from the FERC and state regulators.
As part of the concessions, UP&L agreed to transmit up to 65 megawatts of electricity from Idaho Power to members of the Utah Associated Municipal Power Systems, a group of 26 municipal utilities. UP&L also agreed to transmit 15 megawatts of electricity from Idaho Power to Utah's Washington City, near St. George, Ward said.
The agreement will allow Idaho Power to sell some of its surplus electricity. Idaho Power, in turn, agreed to pay a higher fee for transmission than the rate set by federal regulators.
UP&L agreed to transmit surplus electricity for Idaho Power to the Southwest and Southern California "when conditions allow." This power will be sold on the spot market. The profits from these sales will be split between Idaho Power and UP&L's customers, Ward said.
PacifiCorp's PP&L subsidiary and Idaho Power reached a temporary agreement resolving a dispute on transmitting power through Idaho.
"The agreement appears to mean that UP&L and PP&L will be turning over millions of dollars of free power to Idaho Power hidden in lose factors," Allen said. "An enormous gift of free energy appears to be hidden in the agreement."
Lose factors involve electricity that is lost when it is transmitted over a long distance.
Under a separate agreement with Montana Power, PacifiCorp agreed to buy 15 megawatts of electricity from 1990 to 1993 and 10 megawatts of electricity from 1993 to 1996.