By Brian E. Clark
MADISON – The state’s Public Service Commission (PSC) today unanimously approved the merger of Green Bay’s WPS Resources (WPSR) Corp. and Chicago-based Peoples Energy Corporation.
The approval includes conditions the PSC says will protect customers of WPSR’s Wisconsin utility, Wisconsin Public Service Corporation.
Once the PSC issues its written order on Feb. 16, all WPS and Peoples will need to do is sign the closing papers, said Kerry Spees, a WPS spokesman.
“It’s pretty much a done deal,” he said, noting that the Illinois Commerce Commission signed off on the merger on Wednesday.
The new utility will be renamed Integrys Energy Group and have more than 2.1 million customers and total assets of $10 billion.
Under the conditions approved today, the PSC said Integrys cannot go to Wisconsin ratepayers to recover any transaction costs related to the merger.
“Wisconsin law gives this commission authority to make sure that mergers will not impact Wisconsin ratepayers or the viability of the utility,” PSC Chairman Dan Ebert said.
“With the conditions we have set in place today and with continued commission oversight, Wisconsin customers will be protected.”
Larry Weyers, chairman, president and CEO of WPSR, lauded the PSC decision.
“After months of work and anticipation, we are ready to roll up our sleeves and combine the companies into a world-class organization,” said Weyers, who will lead Integrys. The proposed merger was announced in July 2006.
Charlie Higley, executive director of the Citizens Utility Board (CUB), said he is skeptical of promised “synergy savings” from what WPSR has said will be more efficient utility operations.
In its filings in the proceedings, he said CUB pointed out that three-fourths of mergers fail to provide benefits to the acquiring company’s shareholders, let alone ratepayers.
“Utility mergers almost always enrich utility executives while causing higher rates for ratepayers and the loss of jobs of utility workers, and this merger will probably turn out the same,” Higley said.
He also said he worries that Integrys will encounter problems running Peoples.
For starters, he said Peoples and its subsidiaries had to provide a refund of $100 million that Higley said was “swindled from their customers in a shady deal involving Enron Corporation.”
“Next, the Peoples Gas utility has very old gas pipes, with some dating back to the Civil War. Not only have there been explosions on the Peoples Gas system, but repairs and replacement of old pipes located under the streets of downtown Chicago will be very expensive, posing liability threats to its new owners.”
The combined company will have more than 1.6 million natural gas customers and more than half a million electric customers, with operations in Illinois, Wisconsin, Michigan and Minnesota.
On the nonregulated side, Integrys Energy Services will provide energy marketing services in Texas, the Midwest and northeast United States and parts of Canada. Integrys will also control Peoples Energy Production, a natural gas exploration and production company headquartered in Houston.
Documents associated with the PSC review of the merger can be viewed on the PSC’s Electronic Regulatory Filing System at http://psc.wi.gov/. Type case number 9405-YI-100 in the boxes provided on the PSC homepage or click on the Electronic Regulatory Filing System button.