Virginia SCC to Take Long Look at Dominion-CNG Merger
Virginia's State Corporation Commission (SCC) said it plans to
use the full 180 days allowed by Virginia law before ruling on
Dominion Resources' merger with CNG. The announcement was made just
two weeks after CNG cited fewer potential regulatory problems as a
main reason for selecting the Dominion bid over a hostile offer
from Columbia Energy Group (See Daily GPI, May 13). If the SCC
takes the full 180 days, a decision would not be reached until Nov.
The SCC said the hold-up is due to the potential combination of
Virginia Natural Gas (VNG), a CNG subsidiary serving 220,000
customers in various parts of the state, and Virginia Power, a
Dominion subsidiary serving two million people in central, northern
and eastern Virginia. The SCC said it will explore how the merger
will affect VNG's ability to provide adequate service to its
customers at "just and reasonable rates."
"The decision was made due to the size and scope of the entities
involved," said Ken Schrad, a spokesman for the SCC. "You're
dealing with the largest provider of power in the state and the
third-largest gas provider. The process is definitely a hurdle for
the two companies, but it is too early to tell if they will clear
it or not."
Schrad pointed to a large merger in another industry, Bell
Atlantic's pending combination with GTE, as an example of the SCC's
scrutiny. "There was a case of two large companies seeking to
combine. The SCC took the 180 days to rule on that one, and ruled
against the merger. Right now the two companies are delayed and
back at the drawing board."
Dominion and CNG, however, remained confident that their
timetable of having complete regulatory approval by the year's end
will not be tested. "We accounted for this and as far as we can
see, the merger is right on schedule," said Hunter Applewhite, a
Dominion Resources spokesman.
In related news, Applewhite said the company was exploring the
option of selling Dominion Capital, the company's financial
services arm, to help pay for the $6.4 billion purchase. "Its very
preliminary right now, but it has been discussed," Applewhite said.
"Being primarily an energy company, we see Dominion Capital as a
non-core asset." The financial services company employs 1,000
people. Its subsidiaries include two lending companies, a mortgage
company and a merchant bank. For 1998, Dominion Capital contributed
$58.7 million or 30 cents/share to Dominion Resources' net income.
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