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Spain

Spain

Merger approval process rolls along -- Iberdrola and ScottishPower

Spain's Iberdrola has cleared the two biggest hurdles in its friendly takeover bid for British utility ScottishPower, after gaining regulatory approval in the US and Europe. The world's first major utility merger to be driven by wind power assets is "going according to plan," says Iberdrola. The next step is to gain approval under America's electricity sector security laws. Iberdrola says it "expects final approval in the second term of this year."

Through the merger, Iberdrola will gain the company control of around 6000 MW of operational wind power plant on both sides of the Atlantic Ocean, with about 2000 MW of that coming from ScottishPower's current wind portfolio, most of it in the US (Windpower Monthly, January 2007). The combined pipeline of wind projects in development totals 13,000 MW.

The European Commission (EC) approved the merger without conditions, stating the transaction will "not significantly impede effective competition in the European Economic Area." The EC notes the UK as the only European market with assets held by both utilities, with ScottishPower operating 370 MW of wind capacity and Iberdrola owning a 22.5 MW wind project. But even here, "The combined firm will continue to face several strong, effective competitors with significant market shares."

In America, despite growing wind assets held by both companies, the Federal Energy Regulatory Commission (FERC) also finds "the transaction is consistent with the public interest and will have no adverse effect on competition, rates or regulation." Through its US subsidiary, PPM Energy, ScottishPower owned over 2000 MW of operational assets by end 2006. Last year, Iberdrola acquired two US developers with combined rights to 3800 MW of projects. The Spanish utility is also the single biggest shareholder of Spain's top turbine manufacturer Gamesa Eólica, which operates large turbine manufacturing facilities in Pennsylvania.

FERC says final approval depends on the go-ahead from other US regulatory bodies, the Committee on Foreign Investment in the United States (CFIUS) and the New York State Public Services Commission. CFIUS analyses foreign investments to ensure no risk to US strategic sectors, such as energy. The job of New York commission is to ensure security of supplies by the state's utilities. "They are both complex procedures but should present no obstacle," confides one Iberdrola insider.

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