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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 7, 1998
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Sierra Pacific Resources
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(Exact Name of Registrant as Specified in its Charter)
Nevada 0-508 88-0044418
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
P.O. Box 10100 (6100 Neil Road), Reno, Nevada 89511
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (702) 834-3600
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On July 7, 1998, Sierra Pacific Resources and Nevada Power Company
issued a press release announcing the filing of a joint merger application with
the Public Utilities Commission of Nevada for approval of their proposed merger.
A copy of the press release, dated July 7, 1998, relating to the above
described filing is attached as Exhibit 99.1 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits
99.1 Press Release, dated July 7, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 7, 1998 Sierra Pacific Resources
(Registrant)
By: /s/ Mark A. Ruelle
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(Signature)
Mark A. Ruelle
Senior Vice President
Chief Financial Officer and Treasurer
(Principal Financial Officer)
(Principal Accounting Officer)
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EXHIBIT INDEX
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Exhibit No.
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99.1 Press Release, dated July 7, 1998
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EXHIBIT 99.1
SIERRA PACIFIC, NEVADA POWER FILE MERGER APPLICATION
WITH PUBLIC UTILITIES COMMISSION
RENO and LAS VEGAS, Nevada (July 7, 1998) -- Sierra Pacific Resources
(NYSE: SRP) and Nevada Power Company (NYSE, PSE: NVP) filed a joint merger
application today with the Public Utilities Commission of Nevada (PUCN). The
application includes written testimony describing how the proposed merger will
accelerate customer choice for electricity in Nevada. The testimony also
explains the financial implications of the merger transaction.
SALE OF POWER PLANTS PROPOSED
In the filing, Nevada Power and Sierra Pacific propose selling their
generating plants. Capital raised by the sale will be reinvested primarily in
new transmission and distribution facilities to serve the growing energy needs
of Nevada, the fastest growing state in the nation. Expansion of the state's
electric transmission system will give customers more choices for electric
providers when Nevada is opened to utility competition by December 31, 1999,
according to the testimony.
Divestiture of generation, along with new investments in additional
high-voltage transmission capacity, will help create robust competition in the
retail energy market, the testimony states.
The sale will include generating plants owned by Sierra Pacific and Nevada
Power. Experts from both companies are creating a divestiture process that will
maximize the value of generation assets and aid in the development of workable
competition. Credit Suisse First Boston has been hired to assist with the
design and implementation of an auction process, on a schedule that can be
completed coincident with retail open access in Nevada.
Sierra Pacific and Nevada Power are proposing to sell their electric
generation if the merger is completed.
The companies intend to sell the generating plants to qualified purchasers
who will continue to efficiently and reliably operate these facilities, which
are vital to the communities where they are located, the customers they serve
and the state's economy.
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"The highly skilled employees at these plants are essential contributors to
the value of these assets," said Michael R. Niggli, president and chief
operating officer of Nevada Power. "We expect the value of this workforce will
be recognized during the auction process, and will be reflected in the purchase
prices of the units."
MEETING THE NEEDS OF A GROWING NEVADA
"Our vision is to create a premier distribution, transmission and energy
services company," Niggli said. "This merger is about growth, opportunity and
maximizing shareholder value in the face of the dramatic changes taking place in
the utility industry. This combination will allow us to capitalize on the rapid
customer growth in our territory and convert it to bottom line growth."
"With divestiture of the merged company's generating facilities and by
expanding our electric transmission system, we'll be jump starting Nevada's
entry into competitive energy markets. The benefit to consumers is that they
will have more energy choices," said Malyn K. Malquist, chairman, president and
chief executive officer of Sierra Pacific Resources.
"In a restructured industry, bigger is better. Because of the savings and
efficiencies that will result from the merger we'll be able to offer the new
services and stable prices that customers will demand," he added. "These
products and services will be offered by a strong, Nevada-based company."
PROPOSAL INCLUDES PRICE CAP, SHARED EARNINGS
The companies are proposing a long-term freeze in prices for regulated
utility services (transmission and distribution). Beginning December 31, 1999,
electric generation will be deregulated and prices for that component of service
will be set by the market.
An incentive mechanism through which net merger and other benefits are
shared by customers and investors has also been proposed. Earnings over 12
percent return on equity will be shared with customers on a 50/50 basis,
according to the proposal. A similar agreement already in effect for Sierra
Pacific is expected to result in a refund for customers in 1998 based on the
company's strong financial performance in 1997.
Among other issues addressed in the PUCN merger application are:
The impact of the merger on competition and electricity prices;
Operation of the electric transmission system to ensure competing
energy suppliers have equal access to customers;
Benefits of the merger to employees and stockholders;
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A SILVER STATE MERGER OF EQUALS
Following the merger, Sierra Pacific Resources, the holding company for
Sierra Pacific Power, will become the holding company for both Nevada Power and
Sierra Pacific Power and other subsidiaries. Nevada Power and Sierra Pacific
Resources stockholders will each own approximately 50 percent of the combined
company at the close of the transaction, and both companies will be represented
equally on the new company's board of directors. The utilities will retain their
existing identities in their respective service areas.
The holding company will be headquartered in Reno and the utility
subsidiaries will be based in Las Vegas. Sierra Pacific's natural gas and water
operations will continue to be headquartered in Reno.
Niggli will become chairman and chief executive officer of the holding
company and chairman of its subsidiaries. Malquist will become president and
chief operating officer of the holding company and president and chief executive
officer of Nevada Power Company and Sierra Pacific Power. Charles A. Lenzio,
currently chairman and chief executive officer of Nevada Power Company, will
retire upon completion of the transaction.
The merger is conditioned upon the approval of the PUCN, common
stockholders of both companies, the Federal Energy Regulatory Commission and the
Securities and Exchange Commission.
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THIS PRESS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. THESE FORWARD-LOOKING
STATEMENTS REFLECT NUMEROUS ASSUMPTIONS, AND INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY ARE: ELECTRIC LOAD AND CUSTOMER GROWTH; ABNORMAL WEATHER CONDITIONS;
AVAILABLE SOURCES AND COST OF FUEL AND GENERATING CAPACITY; THE SPEED AND DEGREE
TO WHICH COMPETITION ENTERS THE POWER GENERATION, WHOLESALE AND RETAIL SECTORS
OF THE ELECTRIC UTILITY INDUSTRY; STATE AND FEDERAL REGULATORY INITIATIVES THAT
INCREASE COMPETITION, THREATEN COST AND INVESTMENT RECOVERY, AND IMPACT RATE
STRUCTURES; THE ABILITY OF THE COMBINED COMPANY TO SUCCESSFULLY REDUCE ITS COST
STRUCTURE; THE ECONOMIC CLIMATE AND GROWTH IN THE SERVICE TERRITORIES OF THE TWO
COMPANIES; ECONOMIES GENERATED BY THE MERGER; INTEREST COSTS AND THE OTHER RISKS
DETAILED FROM TIME TO TIME IN THE TWO COMPANIES' SEC REPORTS.
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NOTE TO EDITORS: TODAY'S NEWS RELEASE, ALONG WITH OTHER NEWS ABOUT NEVADA POWER
AND SIERRA PACIFIC, IS AVAILABLE ON THE INTERNET AT HTTP://WWW.NEVADAPOWER.COM
AND HTTP://WWW.SIERRAPACIFIC.COM.
CONTACTS FOR SIERRA PACIFIC: CONTACTS FOR NEVADA POWER:
MEDIA: MEDIA:
Bob Sagan / Charles Fletcher Glenda McCartney / Tom Henley
(702) 834-4834 / (702) 834-3959 (702) 367-5678 / (702) 367-5681
INVESTORS: INVESTORS:
Richard Atkinson Lauran M. Watson
(702) 834-4358 (702) 367-5610
