Buffett gets OK to buy utility

December 25, 2005

PORTLAND, Ore. (AP) - A company controlled by billionaire investor Warren Buffett has struck a deal with regulators and ratepayer groups that would allow it to take over Portland-based PacifiCorp for $9.4 billion.

MidAmerican Energy Holdings Co., headquartered in Des Moines, Iowa, reached an agreement Friday to take over PacifiCorp in exchange for up to $40 million in rate credits and a promise to keep most of the local utility's 1,200 headquarter employees in Portland.

It was quick turn of events for the proposed sale. In November, the staff of the Oregon Public Utility Commission recommended against approving the sale. At the same time, however, the PUC staff said it might reconsider if MidAmerican would be willing to offset the potential risks of the proposed PacifiCorp purchase by providing rate credits to its 517,000 Oregon customers.

The agreement pledges to provide $142.5 million in credits throughout PacifiCorp's six-state region through 2010. For Oregon, that share will come to $39.9 million, reflecting the state's 28 percent share of the company's power system.

Besides the rate credits for the utility's 527,400 customers in Oregon, the agreement also includes concessions to corporate watchdog groups and to environmentalists: The offer has a clear corporate governance structure, as sought by watchdogs, and it pledges to draw more energy from renewable sources over the next decade.

The agreement still needs to be vetted by the PUC, as well as the utility regulators in the five other Western states served by PacifiCorp. The Oregon commission has until Feb. 28 to make a decision.