Federal Regulators Delay Utility Merger

Federal regulators dealt a setback Wednesday to the plans of Washington Water Power Co. and Sierra Pacific Resources to complete their proposed merger by late December.

The Federal Energy Regulatory Commission said that because the companies had not demonstrated that the merger would produce $450 million in estimated cost savings, or that the merger was in the best interest of customers, the agency would hold hearings on the deal.

Company officials said the hearings would likely delay approval from the FERC and the Securities and Exchange Commission - expected by year’s end - for up to a year.

Officials of both companies expressed dismay with the decision, particularly since the six states in which they do business had already approved the deal.

Larry Pierce, Washington Water Power’s vice president of business analysis, said, “Certainly, we are disappointed. The hearings will cause a substantial delay, close to 12 months.”

“This is an eleventh-hour development the companies did not anticipate,” said Deborah Grosser, a utilities analyst with Lehman Brothers in New York. “It may be FERC is taking a new look at mergers as a whole since so many utilities today are involved in mergers.”