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PUC changes stance ScottishPower gets OK with conditions By DAVID PRESZLER The tide of Oregon regulatory opinion has shifted in ScottishPower's bid to take over PacifiCorp, the parent company of Pacific Power. The Oregon Public Utility Commission staff, which recommended rejection of the $11 billion merger in April, is now supporting the deal with conditions, including a rate reduction of about 2.5 percent that would begin in 2001 and last four to six years. "We really welcome their recommendation for approval," said PacifiCorp spokeswoman Leslie Carlson. She said her company and ScottishPower are reviewing the details of the recommendation. The companies and the PUC will meet today and Monday to discuss Wednesday's recommendation. The rate reduction and other consumer-protection guarantees in the conditions swayed staff opinion, according to PUC administrator Marc Hellman. ScottishPower has pitched improved customer service as the key benefit of the merger to consumers and previously shied away from requests for rate reductions. It remains to be seen whether the companies are now prepared to alter that stance. Because Oregon already had higher customer service standards than other states Pacific Power serves, the PUC decided ScottishPower's service promises weren't enough to show a clear benefit for consumers. "They weren't offering us anything," Hellman said. But after months of discussions and meetings, the PUC decided that such benefits could be shown if the companies agreed to conditions designed to protect customers from the possibility of higher rates because of the merger. Oregon's reversal gives the power companies a clean sweep of regulatory staffs in the six states Pacific Power serves. All have now recommended conditional approval of the deal to their utility commissions. California regulators have already approved the deal, while commissions in Oregon and in Washington, Idaho, Utah and Wyoming must still vote on the deal. Oregon hearings are set for July 28-30 in Salem. No final decision on the merger is expected from Oregon's PUC until this fall. The PUC staff recommended 24 conditions to the merger, ranging from accounting and reporting requirements to customer service guarantees and a $20 million annual credit to customers for the first six years after the deal is closed. The complete list of conditions is available online at www.puc.state.or.us/ The conditions would require PacifiCorp to maintain a separate accounting system, keep its financial records at the company's Portland headquarters and maintain its own debt and stock ratings. The two companies would have to file reports every six months through 2002 that detail employee transfers. The conditions call for customer service to be "maintained or improved." Under the proposal, no merger-related rate increases could be considered until at least 2002. The key condition is a $20 million annual credit to customers for six years beginning in 2001. It would be shown as a separate line on monthly bills and reduce annual charges by about 2.5 percent. After the first four years of the credit, the company could petition to lower or eliminate the credit if it can show that savings from the merger have reduced rates. ScottishPower expects to cut Pacific Power's corporate costs by $10 million a year. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA