Wwp Reduces Savings Estimate

The benefits from a proposed merger between Washington Water Power Co. and Sierra Pacific Resources fall short of original estimates, according to documents filed last month with federal regulators.

But the utilities say the decrease will not affect rate freezes that are in place until the year 2001.

The Spokane- and Reno-based utilities shaved $52 million off the $450 million they had said a merger would save over 10 years.

WWP Vice President Larry Pierce said the projected savings were attributed to a transmission link between their service territories, which are hundreds of miles apart.

But transmission costs have increased, he said, while generating resources closer to Reno have become cheaper. Sierra can buy power from those plants without merging with WWP, so the savings cannot be counted as a merger benefit, Pierce said.

A Federal Energy Regulatory Commission challenge of the first estimate was one of the issues that blocked approval of the merger in December.

The deal, which would create a new company named Altus Corp., was scheduled for hearings before an administrative law judge June 4.

The judge reset the hearings for June 18 to allow the commission staff more time to evaluate new information.

The utilities announced the merger in June 1994. Utility commissions in the six states they serve all approved the deal, most on the condition there would be no hikes in the base rates for electricity and natural gas for five years.

WWP and Sierra sell electricity to more than 500,000 customers, and natural gas to about half as many consumers.

Sierra also sells water in the Reno area.

, DataTimes