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http://www.theherald.co.uk/business/news/display.var.1691048.0.0.php

ScottishPower buries hatchet in old battle ground

MARK SMITH, Deputy Business Editor, The Herald, September 15 2007  
ScottishPower has been forced to bury the hatchet after its new owner Iberdrola yesterday announced it had struck a deal in once-warlike Klamath Falls in Oregon - an battle ground for the formerly independent Scottish energy company.

Spanish power group Iberdrola, which acquired ScottishPower last year, yesterday said its US PPM Energy unit had agreed to acquire a 506-megawatt power plant in Klamath Falls, for about e209m (144m).

Iberdrola said the agreement takes into account the amortisation of the municipal bonds that the city issued to finance the construction of the plant, which has been operating since 2001.

The city of Klamath Falls had been evaluating different alternatives following the expiration of two power sales contracts, which left a portion of the plant's output unsold.

The company said the city selected the Iberdrola subsidiary for "its experience operating the plant and its knowledge of regional energy markets".

Nonetheless, in 2004, ScottishPower investors were forced to run the gauntlet after the company's annual meeting was disrupted by a delegation of environmentalists and 18 California native American representatives - members of Karuk, Yurok, Hoopa and Klamath tribes - dramatised their concerns over fish passage in southern Oregon and northern California.

Six dams blocking the spawning grounds, owned and operated by PacifiCorp, which was then a subsidiary of the Glasgow-based utility, were being relicensed for 30 years by the US government.

At the time, the tribes, which had also filed a $1bn (500m) lawsuit against ScottishPower, claimed PacifiCorp's plan for the dams did not include salmon restoration strategies.

The dams, tribal leaders had contended, kept migratory fish out of 350 miles of river habitat while producing oxygen-robbing algae and unnaturally raising and lowering the river to the detriment of the fish. They also said the company's dams contributed to a 90% drop in salmon numbers on the Klamath River.

The company sold its PacificCorp subsidiary to Berkshire Hathaway in May 2005 prior to the Iberdrola acquisition.

A spokesman for Iberdrola declined to comment on ScottishPower's history with the Karuk, Yurok, Hoopa and Klamath tribes.

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