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Economist: Merger to hurt rates, jobs

Joe Napsha
| Thursday, Nov. 16, 2006

Equitable Resources Inc.'s proposed $970 million acquisition of competitor Dominion Peoples could lead to higher natural gas prices for commercial and industrial customers and the loss of jobs, an economist testified Wednesday.

Higher rates for those customers could impact sales and economic development, said Alan Chalfant, a St. Louis economist and consultant, at a state Public Utility Commission hearing into Equitable's proposed purchase of Pittsburgh-based Dominion Peoples and Dominion Hope Gas of Clarksburg, W.Va.

Chalfant testified on behalf of a group of seven industrial customers, including Allegheny Ludlum of Pittsburgh and Union Electric Steel Co. of Carnegie. He said during the hearing at the State Office Building, Downtown, that those customers use a significant amount of the natural gas sold by Equitable and Dominion Peoples. He did not give specifics.

Equitable Resources attorney Charles Thomas challenged Chalfant's prediction, saying there is no evidence the deal will cause job losses.

"You think either of these companies want to lose a large customer• Have you ever been to the Mon Valley?" Thomas asked.

Testimony by Randall Crawford, president of Equitable Resources subsidiary Equitable Utilities, did not allay union concerns about the fate of the pension plan at Dominion Peoples.

Crawford said Equitable has agreed to continue the pension plan for non-union workers for 12 months and to replicate the plan covering Dominion People's unionized workers until their contract expires. Crawford said the future of the pension plan for those workers would be decided in contract negotiations next year.

Robert Mitchell, president of the Utility Workers Union Local 69, which represents about 340 workers, said the union does not know how Equitable will fund the pension plan, or whether it would offer the same kind of defined benefit plan. The pact expires May 1.

The PUC hearings had been delayed while Equitable officials negotiated with parties opposed to the merger who had been expected to testify.

Equitable said it has reached a settlement with Pittsburgh Allegheny County Thermal and the Independent Oil and Gas Association of Pennsylvania over their objections. The company has a tentative agreement with two natural gas marketers, Armerada Hess Corp. of New York and Constellation Energy Group of Baltimore, both of which have operations within Equitable's and Dominion People's service area, Thomas said.

Equitable continued to negotiate with other industry and consumer groups, including the Mon Valley Unemployed Committee, the Office of Consumer Advocate and the Office of Small Business Advocate. Thomas said, however, those potential deals unraveled, and he was not certain why.

Renardo L. Hicks, an attorney representing state Rep. Jake Wheatley, D-Downtown, would only say that objections could not be resolved.

Details of the settlements are confidential until the end of the hearing, Thomas said.

The hearings may conclude today. PUC Administrative Law Judge John Corbett must make a recommendation to the PUC within 90 days after the close of the record on the case. Then the commission is expected to make a decision next year on whether to approve the acquisition.

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