Sierra Pacific, PGE abandon merger plan
RENO (AP) – Citing the need to protect shareholders in a sour Western energy market, Sierra Pacific Resources has abandoned plans to buy the largest electric utility in Oregon from Houston-based Enron Corp.
Sierra Pacific and Enron mutually agreed to terminate the Sierra Pacific purchase of Portland General Electric, which serves the Portland metropolitan area in Oregon and southwest Washington state.
”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 in Reno.
”Terminating this agreement now minimizes further costs to our shareholders as we continue to focus our attention on customers in Nevada and the Lake Tahoe region of California,” he said.
Sierra Pacific Resources owns Nevada Power Co., Sierra Pacific Power Co., 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 PGE.
Sierra Pacific Resources announced plans in November 1999 to buy PGE 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 cut into Sierra Pacific’s finances last summer. Reports surfaced earlier this month that the Reno-based holding company was having second thoughts about the merger with PGE.
Analysts said at the time that Northwest Natural Gas in Portland, Puget Energy in Bellevue, Wash., and IdaCorp in Boise, Idaho, might be interested in PGE if Sierra Pacific and Enron parted ways.
”It really shouldn’t come as a surprise to anyone,” Enron spokeswoman Karen Denne said in Houston.
”For the last couple of weeks we have been saying this transaction was getting more and more difficult to complete,” she said.
Denne said legislative actions and the condition of the energy market in Oregon and Nevada led to Enron’s decision to terminate the deal.
”It became clear to us that we were not going to be able to complete this transaction the with Sierra Pacific,” she said.
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