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Wwp Cites Savings In Utilities Merger Company To Trim 118 Jobs From Spokane Work Force

Tue., March 14, 1995, midnight

The merger of Washington Water Power Co. and Sierra Pacific Resources will cut 118 jobs in Spokane but save ratepayers $449 million over the next 10 years.

Another 254 jobs will be eliminated in Reno, Nev., the headquarters of Sierra Pacific.

The companies made the disclosures Monday in a filing with the Public Service Commission of Nevada.

Altogether, operations in Spokane and the surrounding service area will employ 1,335 after the merger. There will be 1,528 employed in Reno.

The filing confirmed projections made by the companies last June when they announced their intention to form a new company, Resources West Energy.

Nevada is one of five states that must approve the transaction. The Federal Energy Regulatory Commission will make a separate ruling.

Shareholders for both companies gave their consent in November.

The projected savings are just $1 million below those predicted in June but do not include another $62 million the companies would trim even if they were not to merge.

The results, the filing says, will assure a freeze in base rates until the year 2000 in every state served by the utilities except Nevada. There, a limited hike is expected in 1997.

Sierra Pacific provides electric, natural gas and water service to customers in Nevada and California.

WWP delivers electricity and gas to customers in Eastern Washington, North Idaho, Oregon, California and a small area around one of its dams in Montana. The company also is one of Spokane’s largest private employers.

Resources West Energy will have its headquarters in Spokane, but the four divisions of the new company will be split evenly between Reno and Spokane.

The two divisions providing retail utility services to residential and business customers will be based in Reno. Spokane will be the home of wholesale energy operations as well as non-utility operations.

But designation as the center for divisional operations does not mean mass transfers of people. Small-retail operations, for example, will employ 709 in Spokane and 630 in Reno even though the Nevada city is division headquarters.

“This structure will be more flexible and will permit us to adapt quickly to changes in the utility business,” said Walter Higgins, who will be president of Resources West.

Higgins is now chairman of Sierra Pacific.

WWP Chairman Paul Redmond, who will also head Resources West, said the combined companies, with a more diverse customer base, can be served more efficiently and at less cost.

“The merger will give us the size and substance needed to thrive in an industry that’s becoming less regulated an more competitive,” he said.

The filing says the 41 percent of the projected cost savings will come from reduced labor costs, and another 22 percent from cuts in corporate and administrative expenses.

The merger will also reduce the amount of generating capacity that must be held in reserve for emergencies, and the costs of buying natural gas and transmitting electricity.

Don Kopczynski, WWP’s transition leader for the merger, said the companies do not know how many jobs will be cut through attrition, how many by layoffs.

But he noted response to severance packages WWP is offering has exceeded expectations.

Vice President Larry Pierce, who helped negotiate the merger, said officials hope the state commissions reviewing the transactions will respond to the filing by September.

If so, the consolidation will take place this year, he said.

Many utilities are merging to cut costs and prepare for increased deregulation.

“We want to be the standard of business in this industry.” Pierce said.


 

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