Feds OK Sierra’s Portland General takeover

Tuesday, Nov. 21, 2000 | 11:18 a.m.

The Federal Energy Regulatory Commission today approved Sierra Pacific Resources Inc.'s $3.1 billion acquisition of Portland General Electric Co. from Houston-based Enron Corp.

Sierra Pacific of Reno, parent company of Nevada Power Co. of Las Vegas, the dominant electrical utility serving Las Vegas, first announced the deal a year ago. The acquisition now needs regulatory approval of the Securities and Exchange Commission.

The SEC is reviewing the acquisition because it involves the transfer of stock. The deal is expected to be completed by the first quarter of 2001.

Because the deal is an acquisition and not a merger, it does not require shareholder approval. It already has been approved by state regulators in Nevada and Oregon.

FERC originally planned to consider the deal in July, but delayed a vote, saying the agency wanted more information about Sierra Pacific's plan to divert some energy into Nevada from a transmission line that provides power to California.

FERC Chairman James Hoecker said FERC's review of the acquisition focused on the deal's effect on competition, rates and regulation.

Sierra Pacific convinced regulators that the small amount of energy that would be diverted to Nevada would not affect competition or prices.

PGE, which serves about 700,000 customers in northwest Oregon, operated as a subsidiary of Enron, which acquired the company three years ago as a means to sell power to residential customers in California. But Enron dropped that plan when the company determined that new rules in California's deregulated market made it too difficult to make a profit.

The commission endorsed the deal after Sierra Pacific made a commitment to join a regional transmission organization that would connect with other utilities, offering the potential to sell power to other companies to meet peak demands.

The commission also accepted the companies' proposed open access transmission tariff, which allows transmission of power to other utilities. The commission approved Sierra Pacific, Nevada Power and PGE's use of zonal rates based on their respective existing rates.

"With the advent of regional transmission organizations (RTO) and mergers like this, the western wholesale market outside California is changing significantly," Hoecker said. "I am pleased that Sierra, Nevada Power and PGE have made a commitment to join an RTO as a means of bringing greater efficiencies to the growing western markets.

"I expect further steps in this direction in the months to come, as western markets strive to promote reliability, attract capital and control price volatility," Hoecker said.

By combining the two companies, the customer base would grow to 1.7 million, making it one of the largest utilities in the West. The combined operations would have $9 billion in assets.