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Industry Briefs

Industry Briefs

The D.C. Circuit Court of Appeals remanded Friday a FERC decision approving a 20-year cap on bids for Tennessee Gas Pipeline capacity that are considered under the net-present-value approach. The Process Gas Consumers Group (PGC), which includes industrial gas users, challenged the Commission order, arguing that it failed to engage in "reasoned decision-making" by allowing the cap on the NPV bids. ".....[W]e find FERC's reasoning on the cap to be unpersuasive and largely conclusory," the court opined [No. 98-1075]. The court said it didn't "quarrel" with the goal behind the Commission's approval of the NPV capacity-allocation method for Tennessee, "but [we] remind FERC of its admitted need to balance the goal with its duty to prevent exploitation of Tennessee's monopoly power. FERC appears to have forgotten the latter....." PGC also took issue with FERC's decision allowing Tennessee to apply NPV to shippers attempting to change primary receipt and delivery points, and the court agreed with industrials on this point. The court ordered the Commission to "better explain or modify" its approval of both issues.

Coastal Corp.'s exploration and production unit, Coastal Oil and Gas Corp., announced Friday the acquisition of 31,000 net acres in South Texas, Louisiana and Wyoming from an undisclosed seller. In total the properties have a combined 98 wells that produce 26 MMcf/d. Most of the acreage is in South Texas. Added with Coastal's recent purchase of Titan's Gulf of Mexico assets (see Daily GPI, May 21), Dave Arledge, CEO of Coastal, said the company has increased daily gas production by 7% over last year's figures.

Dominion Resources and Consolidated Natural Gas said an amended joint proxy statement reflecting the revised terms of the merger agreement was filed last Thursday with the Securities and Exchange Commission. Dominion amended the terms of the original merger agreement May 11, offering a mixture of stock and cash to provide shareholders of Consolidated Natural Gas $66.60 in value. The original transaction that had been agreed to in February offered only stock. In addition, special meetings for both companies' shareholders to approve the merger have been set for June 30. The joint proxy also notes the post-merger business plan projects that earnings per share for Dominion will increase 9%/year from an estimated $3.31 in 2000 to $4.66 in 2004 for the combined entity. The current annual dividend for Dominion is $2.58 per share. Dominion's targeted payout ratio of dividends to earnings is 70%-75% and is expected to be achieved within two years after the merger is completed.

Potomac Electric Power announced a reorganization of its non-regulated subsidiaries into two major operating groups to aggressively compete for new market share in the telecommunication, electric, natural gas and energy services industries. As part of the reorganization, a new unregulated company, Pepco Holdings, Inc., was created as the parent of Potomac Capital Investment Corp. and Pepco Energy Services, Inc. John McCallum, 49, was promoted to CEO and President of Potomac Capital Investment Corp. Edward R. Mayberry, 51, was promoted to CEO and President of Pepco Energy Services, a newly created company that will serve as the parent for Pepco Services and Pepco Connections, as well as three other newly organized companies to be known as Pepco PowerChoice, Pepco Building Services and Pepco Gas Services. This group of companies will market energy products (electricity and natural gas) and services (including energy efficiency contracting, consulting services, construction management, and facilities operation and maintenance) to current Pepco customers and to businesses and institutions throughout the mid-Atlantic region.

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