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The Pioneer Press, at the very top of the State of California, grants permission for this article to be copied and forwarded.
Pioneer Press, Fort Jones, California June 1, 2005 Vol. 32, No. 32 Page A1, column 2
PacifiCorp is purchased
-- PacifiCorp and Utah Power sell for $5.1 billion.
By Liz Bowen, assistant editor, Pioneer Press, Fort Jones, California
SISKIYOU COUNTY – One of the world’s richest men agreed to purchase PacifiCorp and Utah Power on May 24, 2005 in a surprise deal.
The price tag for the companies that provides power to Northern California and five other Western states is $5.1 billion – in cash.
Striking the second biggest deal of his career, billionaire investor Warren Buffett is making a major move into the energy industry. There are several tiers in Buffett’s business holdings. It is the Berkshire Hathaway Inc., which holds a majority interest in the Iowa-based MidAmerican Energy Holdings Co. that will own PacifiCorp and Utah Power.
"This looks like a better match," said Sally LaBriere, regional community manager for PacifiCorp. "MidAmerican is used to U.S. regulations."
Buffett said much the same thing in an Associated Press article last week, where he was quoted, saying, "The energy sector has long interested us, and this is the right fit."
Actually, the total sale price was $9.4 billion, which was made up of $5.1 billion for the equity, plus the assumption of $4.3 billion of debt.
The Pioneer Press talked with LaBriere about the selling and buying of PacifiCorp, who said that business will continue as usual with PacifiCorp. Under MidAmerican, it will be operated as an independent business. The PacifiCorp chief officer and regional officers will remain in place. According to LaBriere, MidAmerican likes the way PacifiCorp presently looks and runs.
Buffett has said he is a long-term investor and plans on building the company to deliver future value.
The British company ScottishPower purchased PacifiCorp and Utah Power in 1999. Speculations on why the company is selling the two U.S. companies goes back to making stock holders happy. There may not have been a large enough return to please the stockholders.
Ian Russell, ScottishPower chief executive, said in a news release that the company intends to return about $4.5 billion of the proceeds from the sale to the shareholders.
Klamath Tribes complain
During the past year, ScottishPower stockholders were wined and salmon-dined by leaders of the Yurok, Hoopa, Karuk and Upper Klamath Tribes, which live along the Klamath River.
Tribes claimed that dams along the Klamath River were destroying their lives, because the hydroelectric dams affected salmon runs; and salmon is an important part of their diet, they said. While visiting ScottishPower last summer, the Tribal leaders demanded that PacifiCorp should remove the dams as part of the current re-licensing of the Klamath dams.
In a statement released to the media in the United Kingdom and United States last week, the tribes accused the utility of "stringing them along" and "selling them down the river" by engaging in negotiations with them, while planning the sale to an American Company.
The 2004 chinook run was low. But, ironically, the preceding four years had seen record high numbers return to the Iron Gate Dam fish hatchery on the Klamath River. Scientists are in a quandary, wondering why the numbers were lower this year.
But, in another ironic twist, record numbers of the federally and California State Endangered Species Act listed coho salmon were counted in some areas of the Klamath this year.As far as the relicensing with the U.S. Federal Energy Regulatory Commission of the Klamath dams, LaBriere said that the company will continue with negotiations to complete the 50-year relicensing permit for the local power plants. Nothing has changed, she said. The company is proceeding with the relicensing process, which will be completed by 2006.
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