California regulators OK gas deal

David Strow

Wednesday, July 21, 1999 | 11:39 a.m.

Southwest Gas Corp.'s proposed merger with ONEOK Inc. cleared its final regulatory hurdle Tuesday, as Arizona regulators and ONEOK officials blasted rival Southern Union's last-ditch attempt to block the merger.

But in a bizarre development, Arizona Corporation Commissioner Jim Irvin -- the target of a racketeering lawsuit filed Monday by Southern Union -- accused political foes on the Arizona commission of working with Southern Union in an effort to defame him. Irvin accused Southern Union of working with his political enemies in an attempt to kill the Southwest-ONEOK merger.

Southwest announced Tuesday that it and ONEOK had won the support of the Office of Ratepayer Advocates, the consumer advocacy office of the California Public Utilities Commission.

Although the merger must still be approved by the CPUC, the agreement virtually assures California approval. California regulators are set to begin hearings July 28, with a final decision expected by October.

Nevada's Public Utilities Commission has already approved the merger, while the staff of the Arizona Corporation Commission has also recommended approval. Arizona hearings are set to begin July 22.

With regulatory approval in each of Southwest's three states now appearing certain, the only hurdle that remains is a vote of Southwest's shareholders on Aug. 10. ONEOK is trying to complete its $1.8 billion acquisition of Southwest by the fourth quarter of this year.

Southern Union, whose $1.88 billion counterbid was spurned by Southwest, attempted again to block the deal Monday by filing a racketeering and fraud lawsuit in U.S. District Court in Phoenix. Irvin and former executive secretary Jack Rose were accused of conspiring to block the merger. The lawsuit also targeted ONEOK and Southwest, alleging fraud. Southern Union is seeking $750 million.

In a statement issued Tuesday, Irvin alleged that "certain individuals within the Arizona Corporation Commission," working in concert with Southern Union, sought "to discredit my reputation and attack my integrity for purely political purposes." He strongly denied Southern Union's charges.

"There is no secret that I have political enemies within this commission who will take any opportunity to drag my good name and good reputation through mud -- but their attempt to discredit me and shift my focus ... will be unsuccessful," the Irvin statement said. "It is obvious to me that Southern has been working in conjunction with individuals within this commission to apply the political pressure necessary in thwarting consideration of the Southwest/ONEOK proposed merger."

Irvin noted that James Fisher, executive assistant to former Commissioner Tony West, had admitted to personally ridiculing Irvin in May. Fisher supplied affidavits for Southern Union's lawsuit, "and is the source of some of the allegations contained therein," Irvin said.

"Mr. Fisher's prior actions cast serious doubt on his credibility as a witness for Southern in his attempt to, once again, attack my personal integrity and my work on behalf of Arizona consumers," Irvin said. "His attempt to defame my reputation will no longer be tolerated, and shall be challenged in a court of law."

Neither West nor Fisher are now part of the Arizona commission. In a May letter to Irvin, West said Fisher had made a "serious and profound attempt to apologize" to Irvin, and noted that he had been reprimanded.

Meanwhile, ONEOK issued a statement Tuesday condemning the Southern Union lawsuit, calling it "another desperate attempt by Southern Union to slow the approval process and create confusion about the pending ONEOK/Southwest Gas merger."

"It is difficult to dignify such unconscionable accusations with any response," ONEOK Chairman and Chief Executive Larry Brummett said. "ONEOK has an excellent reputation in all its service areas. Our level of community involvement and service to customers is well known and respected.

"We stand on our reputation content to face the scrutiny of any comparison between ONEOK and Southern Union."