The Deal's Disputed Line Item

So far, the only organized opposition to the Public Service Company merger is coming from environmentalists, who fear that one consequence of tying Colorado's power supply to Texas could be more air pollution in Denver.

To link the two utilities, a $150 million power line will have to be built between Pueblo and Amarillo, Texas. Still in the planning stages, the power line will play a crucial role in allowing the new company to move power between Texas and its largest customer base in Denver. Environmentalists fear Public Service may be tempted to produce more power at its cheaper, coal-fired plants in Denver and ship it to Texas, in the process putting more pollution into the skies over the Front Range.

"Public Service is 90 to 95 percent coal-based, and Southwestern is closer to 50 percent coal-based," says Rick Gilliam, a former Public Service rate analyst who now works for the Land and Water Fund of the Rockies. "Coal is by far the cheapest fuel today. They'll be running coal-fired plants up here instead of gas-fired plants in Texas."

Coloradans could pay the price for Public Service's new ability to shift power between markets, Gilliam argues. "There's several million people living here subject to the health impacts," he says. To avoid increased air pollution, the Land and Water Fund wants Public Service to install new emissions-control equipment at its Colorado plants before the power line goes into operation.

According to Public Service, though, its Colorado plants are already working near full capacity, and the new company will send power from Texas to Colorado, not vice versa. "It's foolhardy to think Public Service will be shipping power to Amarillo," says Public Service spokesman Mark Stutz. "It's a tough argument for us to stomach, because we buy about a third of our electricity from other utilities. One of the reasons the merger is so attractive is because Southwestern has a surplus of power."

Stutz insists it will be the Texas plants that serve Denver, the only major city in the new company's territory. "Denver is vibrant and growing, while Amarillo and Lubbock are flat," he says. "The power plants down there are up and running, and we need to import power."

--Steers