Industry leaders call for PSC to suspend regulatory review and investigate proposed utility merger; 3 challenge power company's 'ludicrous' claim that merger would have no impact on utility deregulation

Business Wire, May 11, 1995

MADISON, Wis.--(BUSINESS WIRE)--May 11, 1995--Three leading representatives of Wisconsin's electric utility industry on Tuesday called for the state Public Service Commission to suspend its current agenda and investigate a proposed $6 billion merger of Wisconsin Energy Corp. and Northern States Power Co.

In a letter to Commissioner Scott A. Neitzel, officials of Municipal Electric Utilities of Wisconsin (MEUW), Madison Gas & Electric (MG&E), and Wisconsin Public Power Inc. System (WPPI) urged the PSC to postpone debate on utility deregulation until the proposed deal is better understood -- and disputed claims that the merger would have no impact on restructuring.

``The suggestion that this merger should have no impact on the PSC's restructuring objectives is ludicrous,'' the three said in their letter. ``This merger directly undermines the goal of creating a vigorous and competitive industry that lowers costs and benefits all consumers.

``This is like saying the baseball strike had no effect on the fans. Quite frankly, the fans are angry,'' they said.

The letter was signed by David C. Mebane, chairman, president and chief executive officer of MG&E, an investor-owned utility; Nils Holmgren, president of MEUW, a trade association that represents 82 utilities; and Roy Thilly, general manager and counsel for WPPI, a wholesale supplier of electricity to 30 Wisconsin municipalities.

``We call upon you to suspend the committee's current agenda, have the advisory panel conduct a special investigation of the proposed merger and then resume our effort to develop a restructuring plan,'' the three told Neitzel. ``There are many unanswered questions. Proceeding without some hard facts and important details would be like driving in a foreign country without a road map.''

Mebane, Holmgren, and Thilly questioned whether a corporate giant located outside the state of Wisconsin would be the best deal for Wisconsin's energy customers.

In the letter, the three said the PSC must look beyond the aggressive public relations effort to sell the merger and focus on its potential negative impacts. Among them:

o Out-of-state monopolistic control of energy supplies for more than 50 percent of Wisconsin's population.

o Out-of-state monopolistic control of Wisconsin's access to critical volumes of imported electric power.

o Out-of-state control for the vast majority of funds currently available for economic development in Wisconsin.

o Out-of-state control of 6,000 utility employee positions currently held by Wisconsin citizens and taxpayers.

o Out-of-state control of investment decisions affecting $9 billion of existing and future utility plants and facilities.

o Out-of-state control of operational and environmental decisions affecting everyone in Wisconsin.

o Out-of-state control of the reliability, quality and pricing of energy produced for more than 50 percent of Wisconsin's citizens, farms, businesses and communities.

``We simply do not know what this means for Wisconsin's electric utility industry and what, if any, protections will exist to prevent market abuse and monopolistic power,'' the letter reads. ``Without this knowledge it will be impossible to protect the public's interests and decide how the restructuring debate should move forward.''

The merger -- the largest electric utility combination in history -- would create Primergy Corp., which would be headquartered in Minneapolis and would serve 3 million people across Wisconsin, Minnesota, North Dakota, South Dakota and Michigan.

The letter follows:

May 9, 1995

The Honorable Scott A. Neitzel Commissioner Public Service Commission of Wisconsin Post Office Box 7854 Madison, Wisconsin 53707-7854

Dear Commissioner Neitzel:

The recently announced merger between Wisconsin Electric Power Company, the largest electric utility in the state, and Northern States Power Company, the largest electric utility in Minnesota, could have devastating effects on every citizen, business and government entity in Wisconsin. We were stunned to hear last week a senior Wisconsin Electric executive blandly claim the merger will have ``no impact'' at all on utility deregulation issues. This is like saying the baseball strike had no effect on the fans. Quite frankly, the fans are angry.

We believe it's time for some straight answers from those behind this mega-deal. As head of the Public Service Commission's Advisory Committee on Restructuring, we call upon you to suspend the committee's current agenda, have the advisory panel conduct a special investigation of the proposed merger and then resume our effort to develop a restructuring plan. There are many unanswered questions, and proceeding without some hard facts and important details would be like driving in a foreign country without a road map. The suggestion that this merger should have no impact on the PSC's restructuring objectives is ludicrous. This merger directly undermines the goal of creating a vigorous and competitive industry that lowers costs and benefits all consumers. This is, after all, the largest electric utility merger in history.