Peoples' $720M purchase of Equitable Gas approved by state regulators
State regulators approved the sale of Equitable Gas Co. to Peoples Natural Gas Co. on Thursday, removing one of the final hurdles to a deal that will make Peoples the largest gas utility in Pennsylvania.
The state Public Utility Commission approved the $720 million deal, announced in December, by a 5-0 vote. If completed, North Shore-based Peoples would distribute natural gas to about 660,000 customers in 19 Pennsylvania counties, West Virginia and Kentucky.
A settlement approved by the PUC will cap Peoples' existing base rates until 2018 and is expected to save millions by combining operations and avoiding replacement of some pipelines. But Commissioner James H. Cawley warned that some terms could increase the wholesale cost of natural gas that Peoples passes on to consumers.
The transaction requires Peoples to purchase wholesale gas from Downtown-based EQT Corp., the parent of Equitable Gas, in place of current supplier Dominion Transmission Inc., Cawley said.
Traditionally, “Peoples was successful in providing gas supply service over 30 percent less expensively than Equitable,” Cawley said in a statement. EQT's transmission system lacks the same level of “competitive pricing” as the Dominion system, he said, and the deal “will tether Peoples” to EQT.
Peoples Gas spokesman Barry Kukovich called Cawley's concerns “prudent” and said People's will get more wholesale gas from EQT. But consumers can look for a better deal from alternative suppliers, and 33 percent of Peoples' current customers select such suppliers who offer better deals. An EQT spokesman could not be reached.
“We are pleased with the PUC's decision, and it is an important step in the merger,” Kukovich said. “We hope it can be completed by the end of the year.”
Approval is needed from the Federal Energy Regulatory Commission, he said. The Federal Trade Commission and regulators from West Virginia and Kentucky have approved it. The companies must wait 30 days after the PUC approval to close the transaction to allow for final appeals.
“In my view, the merger represents a win for consumers,” Commissioner Pamela A. Witmer said in a statement.
Combining operations of Peoples and Equitable will save an estimated $10 million to $20 million a year. The combined company will save an estimated $162 million in pipeline replacement costs in areas where both have lines, sometimes running parallel. Such savings will lower consumer rates.
The sale would allow EQT to invest in its rapidly growing natural gas drilling, pipeline and compressor station interests, particularly in the Marcellus shale, and permit Peoples to concentrate on its core business of local gas distribution to residential, commercial and industrial customers.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Groups appeal Shell air permit for Beaver County project
- Private schools fill void in driver education in Western Pennsylvania
- Operating loss mounts at Highmark’s core hospital system
- Esmark CEO Bouchard: Steel industry ‘weathered through the storm’
- Muni bond funds stressed
- Delphi buys CMU spinoff that makes self-driving car software
- AmEx’s accord with merchants over fees rejected by judge
- Polymer Enterprises finds success in specialty tire market
- Earnings misses by Allstate, NRG drag market lower for 3rd consecutive day
- Vote set at SEC to reveal pay gap between CEO and median employee at publicly traded companies
- Israel’s Teva drops bid for Mylan, buys Allergan for $40.5B