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West Virginia Action Jeopardizes Sale of Dominion Hope, Peoples

Dominion Resources last week said it was still weighing its options following the decision of West Virginia regulators to reject the proposed sale of the Dominion Hope natural gas distribution company to a San Francisco investment company.

"We're still evaluating and determining our options," said Dominion spokesman Dan Donovan. Either side -- Richmond, VA-based Dominion Resources or SteelRiver Infrastructure Fund North America LP -- can elect to cancel the sale after Dec. 31, he noted. However, if they choose to proceed, they could appeal the decision of the West Virginia Public Service Commission (PSC) at the commission and, if unsuccessful there, challenge it in court.

In rejecting the sale of Dominion Hope, the PSC said the deal, as structured, was contrary to the public interest. SteelRiver had requested an immediate and additional $7.2 million tariff rate increase arising solely from the sale, over and above an increase of $8.78 million that was approved for Dominion Hope in November, without offering corresponding benefits to its customers, according to regulators.

Donovan conceded that West Virginia's rejection of the Dominion Hope transaction could also block the sale of the Dominion Peoples utility to SteelRiver, which was approved by the Pennsylvania Public Utility Commission in November. As a condition of its July 2008 agreement, SteelRiver required that its $910 million purchase of Hope and Peoples be a package deal.

Dominion Hope, headquartered in Clarksburg, WV, provides natural gas service to 115,000 customers in 32 counties in the state. Pittsburgh, PA-based Dominion Peoples serves more than 350,000 homes and business in 16 southwestern Pennsylvania counties.

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