Concerns Raised About Hostile Southern Union Bid
LAS VEGAS, June 1 /PRNewswire/ -- The Consumer Advocate for the state of
Nevada and a key Nevada state legislator who oversees utility matters have
voiced strong support for the proposed combination of Southwest Gas
(NYSE: SWX) and ONEOK, Inc., of Tulsa, OK. The Consumer Advocate, at the same
time, expressed concerns about the viability of an unsolicited (and now
rejected) competing merger offer from Southern Union Co.
Their comments came during one of two consumer sessions conducted by the
Public Utilities Commission of Nevada on May 26 and 27. The sessions are part
of the Commission approval process of the Southwest Gas/ONEOK combination.
Evidentiary hearings on the case are scheduled to start June 21.
Fred Schmidt, the State Consumer Advocate in the Nevada Attorney General's
Office, said, "Frankly, we have been very impressed with the ONEOK company and
it is not often that I say that because we are usually very skeptical of these
things. We are very impressed because of the commitments that they've made
and the type of personnel that we've met." Schmidt noted that ONEOK had
pledged a continued concern for quality of service, reliability of service and
stability in rates.
State Senator Randolph Townsend (R-Washoe), chair of the State Senate
Committee on Commerce and Labor, which oversees all utility matters and the
Public Utilities Commission, also addressed the hearing. "This merger will
provide significant benefits to consumers as well as shareholders," he said.
Schmidt told the hearing that his impressions of ONEOK were based on
intensive study of the company, meetings with ONEOK and Southwest Gas
employees, and evaluations by regulatory consultants who are very familiar
with ONEOK's utility operations in Oklahoma and Kansas.
Schmidt said his office also has performed a preliminary evaluation of a
competing offer by Southern Union, and concluded that, "we did not think that
they had the financial capability to pull off the offer that they put forward
without substantially jeopardizing the current rate levels that customers pay
His office evaluated the competing offer because "we want to make sure
that the combination is the best that is possible at the time frame that is
pursued and... ensure for the customers in Nevada that the same or better
quality of service, reliability of service, and rates that customers have
gotten from Southwest Gas will continue," he said. (The unsolicited offer by
Southern Union has been rejected by Southwest Gas Corp.'s board of directors
because of concerns about regulatory uncertainty and delay.)
State Senator Townsend, in explaining the rationale for his support of the
Southwest Gas-ONEOK combination, said, "This merger will lead to a more open,
competitive market in Nevada. In states where they operate currently, ONEOK
has implemented policies that facilitate, even invite, competition. There
will be a direct benefit to consumers and all customer groups if those
practices are carried forward here in Nevada. It is apparent to me that
customer concerns are driving ONEOK's efforts. ONEOK will ensure that
customers continue to receive the high quality of service Southwest Gas
currently provides to all of its customers."
State Senator Mike Schneider (D-Clark) also threw his support behind the
proposed merger. ONEOK "will be a good partner to Nevada, just as Southwest
Gas has been. Partnerships are extremely valuable and because of their
(ONEOK) assurances to the community and education, I am supporting this
merger," he said. Former Nevada Governor Bob Miller, speaking on behalf of
ONEOK also expressed a supporting opinion on the merger. He said of ONEOK:
"They are a very strong financial company which will assist those of us that
receive our gas here in southern Nevada so that we can meet the needs of this
growing market. This merger, I think, will serve well the residents of the
community as well as the employees of Southwest Gas in the ensuing years."
In addition to past and present public officials, Public Service
Commissioner Donald Soderberg also heard support from a host of employees and
the heads of nonprofit organizations in the two communities.
Garth Winkler, president and chief professional officer of the United Way
of Southern Nevada compared ONEOK and Southern Union to the Charles Dickens
classic line, "It was the best of times and the worst of times."
Winkler noted that he had contacted his counterparts in Tulsa and Austin
to learn how the two Southwest Gas suitors support the United Ways in their
respective communities. He reported learning that ONEOK was a community
leader, matching its employees' pledges to the agency. On the other hand,
Southern Union contributed one-seventeenth the ONEOK level, before the
"ONEOK is One OK with me," he said.
The Commission also heard support for the merger from many of Southwest's
community partners including the heads of the homebuilder's association,
Salvation Army, and the minority contractors association. Nine Southwest Gas
employees threw their support to the merger with ONEOK as well.
"I'm a customer, a shareholder and an employee," said Susan Barnes,
Southwest Gas customer representative in Carson City. "Southwest Gas has
worked hard to provide the best in customer service, and I don't want to lose
that important element in our business. ONEOK has placed just as high a
priority on delivering good customer service as we do. That's very reassuring
to me and the people I work with in the office," Barnes said.
Sharon Barker, executive director for the United Way of Northern Nevada
and the Sierra, told the Commission that Southwest Gas and its representatives
always respond to community needs. "They never say no." She commended the
company for its financial support, in kind assistance and hundreds of
volunteer hours to make communities better. She noted that she had contacted
her counterparts in Oklahoma and learned that ONEOK's philosophy toward
community support mirrors that of Southwest Gas.
Col. Maude Sullivan and Lt. John Van Cleef, of the Salvation Army in Las
Vegas and Carson City respectively, explained to the Commission how the
Southwest Gas Energy Share program has helped residents in their respective
communities who are having difficulty paying their energy bills. They
commended the company and its employees for helping make the community a
better place to live. They noted that ONEOK has a comparable philanthropic
philosophy, donating more than $2 million a year to the communities it serves.
The Commission also learned that Southwest Gas partners closely with the
Southern Nevada Home Builders, according to Irene Porter, executive director
of the organization. "If this merger makes Southwest Gas a stronger company,
then it will be good for us as well," she said.
In the northern Nevada hearings, the Commission received only one letter
opposing the merger. Ernest Colton, a Carson City resident, asked that the
proceedings be delayed for a year until ONEOK could demonstrate that it had
resolved all potential computer issues concerning the "Year 2000 (Y2K)
Commissioner Soderberg explained that the proceeding could not be delayed
because PUCN rules require the Commission to act on the merger filing within
180 days of the Feb. 19 filing date.
ONEOK Attorney John Gaberino, Jr., told the meeting that ONEOK is in the
process of completing its Y2K compliance program and expects to be fully
compliant by this fall.
SOURCE Southwest Gas Corporation
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CONTACT: Media: Lew Phelps of Sitrick and Company, 310-788-2850, for Southwest Gas; or Shareholders: Laura Hobbs of Southwest Gas, 702-876-7237