Commission begins review of MidAmerican bid to buy PacifiCorp
Boise – The bid by an Iowa-based energy company to purchase PacifiCorp, which does business in southeastern Idaho as Utah Power & Light, is now under review by the Idaho Public Utilities Commission.
The commission issued an order today that establishes deadlines for interested parties who want to intervene in the case and notifies customers that the commission will soon establish dates for public hearings.
MidAmerican Energy Holdings Company, based in Des Moines, Iowa, is seeking authority from Idaho and five other states to acquire PacifiCorp in a sale of common stock valued at about $9.4 billion. PacifiCorp, a subsidiary of Scottish Power Plc, provides retail electric service to 1.6 million customers in six states, including about 60,000 customers in southeastern Idaho.
Parties who want to intervene in the case for the purpose of presenting evidence or cross-examining witnesses at future hearings must file a petition to intervene by no later than Sept. 1. Parties who already sought and received intervention status include Soda Springs-based Monsanto Company (PacifiCorp’s largest customer in its six-state territory), the Idaho Irrigation Pumpers Association and Idaho Power Company. Opportunities for the general public to offer written or oral testimony will be announced soon when the commission sets public hearing dates.
The commission’s job, as defined in state statutes, will be to ensure that 1) the transaction is in the public interest, 2) rates will not increase as a direct result of the transaction and 3) MidAmerican has the intent and financial ability to operate and maintain PacifiCorp’s operation in Idaho.
The company is requesting the commission complete its review no later than Feb. 28, 2006. An order issued by that date would allow the parties to complete the transaction by March 31.
MidAmerican Energy Holdings, whose principal owner is Berkshire Hathaway, Inc., headed by billionaire investor Warren Buffett, is a privately held Iowa corporation engaged primarily in the production and delivery of energy. It reports global assets of about $20 billion with 2004 revenues totaling $6.6 billion. The stock purchase agreement provides for the sale of all PacifiCorp common stock to MidAmerican. The sale of the common stock is valued at about $9.4 billion, consisting of about $5.1 billion in cash plus about $4.3 billion in net debt and preferred stock, which will remain outstanding at PacifiCorp.
MidAmerican’s major business operations include:
n MidAmerican Energy Company, an electric and natural gas utility serving about 70,000 customers in Iowa, Illinois, South Dakota and Nebraska;
n CalEnergy Generation, which includes 14 geothermal plants in the western United States and the Philippines and natural gas generators in four states;
n Kern River Gas Transmission Company, a natural gas pipeline company headquartered in Salt Lake City, with 1,700 miles of interstate pipeline from Wyoming to southern California;
n Northern Natural Gas Company, headquartered in Omaha, with more than 16,500 miles of pipeline from Texas to the upper Midwest.
MidAmerican claims it is “uniquely suited,” to invest a projected $1 billion per year for the next five years to upgrade PacifiCorp’s generation and transmission facilities. It can do so, the company claims, because it is privately held and not subject to shareholder expectations or regular, quarterly dividends and relatively fast returns on investments.
MidAmerican said it would renew and extend the service quality and performance quality commitments made by PacifiCorp during the Scottish Power merger case in 1999. It also says there will be no reduction in employees as a result of the transaction and that PacifiCorp headquarters will remain in Portland.
Documents related to MidAmerican’s application are available on the commission Web site at www.puc.idaho.gov. Click on “File Room,” then on “Electric Cases,” and scroll down to Case No. PAC-E-05-08.