Most Utahns will buy their electricity from a Scottish company by the end of next year under merger plans announced Monday morning.
ScottishPower, a United Kingdom utility, will buy Utah Power parent company PacifiCorp for about $7.9 billion in stock to create a company with more than 7 million customers in Britain, Australia and the United States.The deal will be the first in which a foreign company purchases a U.S. utility if it receives approval of shareholders of both companies and various regulatory agencies in the states and nations involved.
But PacifiCorp spokesman David Eskelsen said most of the company's 585,000 Utah customers probably will not notice any difference in the utility when the deal goes through.
"Utah Power will remain a low-cost provider of electric service," Eskelsen said Monday. "I don't think local customers in Utah will see a big difference in the fact that they can still call a local person in one of our business centers, either in Utah or in Portland (Ore.). The object is to take the good customer service that we have done in the past and make it better."
PacifiCorp would become a wholly owned subsidiary of ScottishPower under the agreement, he said, but the local company would continue to be known as Utah Power.
The company has about 2,300 employees in Utah, including executives, line workers, service providers, miners and power plant workers. An early retirement program already cut PacifiCorp's total work force by about 700 people this year, and Eskelsen said he does not expect any immediate job cuts to result from the merger.
"We're not expecting anything huge," he said. "There may be some reductions once the merger is completed."
ScottishPower said in a press release that it expects some "work-force reductions" after the merger is completed but wouldn't say specifically how many. However, the two companies currently have 24,500 total workers, and ScottishPower expects to have 23,500 after the merger, so a reduction of 1,000 people would not be a huge hit.
"ScottishPower will seek to minimize work-force effects of the merger, primarily through reduced hiring, attrition, employee retraining and appropriate separation programs," the company said. "All union contracts will be honored."
Eskelsen said he does not expect the announced merger to have any impact on a general rate case for the company that is currently under consideration by the Utah Public Service Commission.
Hearings concluded last month, and the PSC should announce a decision in the case by the end of this month or early in January. The result could be a rate reduction of $17.5 million to $75 million annually for Utah Power customers.
"We're still a regulated company in Utah, and until the state Legislature decides otherwise, we'll remain that way," Eskelsen said.
PSC Chairman Stephen F. Mecham agreed Monday that the merger probably will not affect the rate case, but he said the PSC will examine the deal.
"Clearly this commission . . . has reviewed the last merger, of Pacific Power & Light with Utah Power & Light (in 1989), so there is at least some precedent there," Mecham said. "Most likely we will use similar filing requirements that the commission used then in order to review the merger and go through the approval process."
He said he has not seen details of the proposed deal, and he is not sure whether the issue of foreign ownership will be a major concern.
"Clearly one of the issues will be what, if any, impact there will be on customers in Utah and how it will or if it will affect them," Mecham said. "At this moment, having not seen precisely how the merger is proposed, I wouldn't anticipate any noticeable changes to customers here."
Mecham said state regulators had been hearing rumors of the coming takeover for several weeks but ScottishPower officials have not filed anything with the PSC.
Eskelsen said PacifiCorp will seek regulatory approval of the deal in all of its state jurisdictions, just as it did for the 1989 merger.
"That process took some months, but generally everybody agreed that shareholder and customer benefits made it a good deal," he said.
Eskelsen said he does not expect a strong public reaction to the merger, because it will not have a direct effect on people.
Roger Ball, administrative secretary of the Utah Committee of Consumer Services, which is supposed to look after the interests of small commercial and residential utility customers, said he also does not expect much of a reaction.
The actual merger will probably have less of an impact on customers than the Utah Power and Pacific Power deal did in 1989, he said.
"What we've seen over the last 10 years is the emigration of the leadership of Utah Power & Light from Salt Lake City to Portland," Ball said. "So Utah Power is already very much a subsidiary of PacifiCorp. It's not likely to be treated much differently by being controlled from Glasgow (Scotland) rather than Portland."
Ball, who grew up in Britain and used to own shares in ScottishPower, said the area the company serves now is similar economically and geographically to the Pacific Northwest area served by PacifiCorp. But he said it will be interesting to see how the Scottish company fares in a U.S. venture.
"At least one, and I think more than one, of the England and Wales regional (power) distributing companies now belong to an American company, so in a sense, this is kind of tit for tat," Ball said. "But having said that, British companies generally have not done well investing in the American market. . . .
"The levels of complexity of utility regulation here in the United States are very considerable, and one has to ask oneself the question, 'Do the folks in Glasgow really understand just how complex they are?'"
Deseret News business editor Max Knudson contributed to this report.