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U.S. Energy Agency OKs Buffett's PacifiCorp Buy
Parmy Olson, 12.16.05,

LONDON - "We enjoy the process far more than the proceeds," Warren Buffett once sagaciously quipped--although the sticky red tape of regulators can make any process a little less than pleasant.

Joyfully or not, the billionaire has been steering his subsidiary, MidAmerican, through a deal to buy PacifiCorp from Scottish Power for $5.1 billion including more than $4 billion in debt. It will boost the number of its electric and natural gas customers in the American Midwest from 5 million to 6.6 million. And now the U.S. Federal Energy Regulatory Commission has just given Buffett the green light.

The process hasn't been straightforward for MidAmerican, which is 80% owned by Buffett's Berkshire Hathaway. Back in May, Buffett had been trying to woo a group of state regulators by talking up his plan to acquire the company. The watchdogs were noncommittal then, and the mood had still not changed a month ago when Oregon's Public Utility Commission recommended regulators deny the merger. Even so, the group said it would reconsider if MidAmerica sweetened the pot by providing rate credits to PacifiCorp's 517,000 Oregon customers, which would show as a pleasant surprise on their monthly bills.

MidAmerican, however, has resisted previous calls for rate credits, some media reports have said, emphasizing instead plans to spend $1.3 billion to improve PacifiCorp's electricity network.

For now, MidAmerican is pleased with the "milestone" that's been reached by the federal agency's rubber stamp, it said in a statement, adding it was confident the deal would close in the first quarter of 2006.

There are still a few more watchdogs to win over though: six other state utilities commissions must approve the deal, along with the Nuclear Regulatory Commission and the Federal Communications Commission. For those who like a challenge, an enjoyable process if ever there was one.