Nevada Power owner abandons utility purchase

Friday, April 27, 2001 | 10:58 a.m.

SUN STAFF AND WIRE REPORTS

Sierra Pacific Resources, as expected, Thursday canceled plans to buy the largest electric utility in Oregon from Houston-based Enron Corp., citing the need to protect shareholders in a sour Western energy market.

Sierra Pacific and Enron mutually agreed to terminate Sierra Pacific's purchase of Portland General Electric, which serves the Portland metropolitan area in Oregon and southwest Washington state. The completion of the transaction had been doubtful for the last couple of weeks.

"While this acquisition would have offered many efficiencies in utility distribution for customers in both Nevada and Oregon, completing it was becoming increasingly difficult in the current market and political environment in the West," said Walt Higgins, chairman and CEO of Sierra Pacific Resources.

Sierra Pacific Resources owns Nevada Power Co. in Las Vegas, Sierra Pacific Power Co. in Reno, Tuscarora Gas Pipeline Co. and Sierra Pacific Communications.

Enron, an energy marketing company, bought Portland General Electric in 1997 but found energy deregulation moving too slowly in Oregon to meet its plans, and it began to shop for a buyer for the utility.

Sierra Pacific Resources announced plans in November 1999 to buy it for $3.1 billion in cash and assumed debt, an amount similar to what Enron paid two years earlier.

But energy shortages and high wholesale electricity prices hurt Sierra Pacific's finances the last few quarters, making financing of the deal more difficult. And Nevada regulators and legislators moved this year to block a plan by Sierra Pacific to sell its power plants. Those sales would have raised cash that could have been used to help finance the Portland acquisition.

Investors had little reaction to the cancelation today because it was expected. Sierra Pacific stock was up 4 cents this morning to $15.50.