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Northern States Picking up 20,000 Natrogas Customers

Northern States Picking up 20,000 Natrogas Customers

Minneapolis-based Northern States Power Co. will add about 5,000 natural gas and 15,000 propane customers in four states through the acquisition of Natrogas Inc., also of Minneapolis. The deal requires regulatory approval.

Natrogas subsidiary Western Gas Utilities Inc. serves 5,000 gas customers in Minnesota. NSP and Western will merge, and the gas customers will become part of the regulated NSP gas utility's operation and be served from NSP's St. Cloud, MN, regional office.

"Merging Western into NSP Gas will give us access to a growing area west of Minneapolis. The addition of the Natrogas propane business moves NSP closer to becoming the single provider of our customers' energy needs," said Cyndi Lesher, NSP Gas president. She said NSP provides electricity to most of the natural gas communities served by Western and also has electric operations in many of the propane communities.

Natrogas of Minneapolis provides retail and wholesale liquefied propane service to 15,000 customers in 20 locations throughout Minnesota, Wisconsin, North Dakota and South Dakota. Propane operations will become a subsidiary of NSP through a stock-for-stock deal. Steve Neidermire, manager of new business development for NSP Gas, will become general manager and chief operating officer of the propane operations when the merger is completed. Also part of the deal is Natrogas' wholesale propane business, North American Energy Inc., in Hankinson, ND.

"Historically, we've worked with the company and kind of always been interested in their natural gas piece, as well as other LDCs in the area," Neidermire said. "I think it's really the combination and the size of the company that attracted us. It's local. Certainly the natural gas customers fit very well with our existing service territory, and it's a growth area." There are no plans to expand the LDC assets to be acquired, Neidermire said, other than to accommodate growth. He said the company will benefit from combining gas supply and transportation contracts with its existing LDC business.

Other NSP gas acquisitions in the last few years are Natural Gas Inc. of Richmond, WI, and Black Mountain Gas Co. of Cave Creek, AZ, near Phoenix.

Natrogas revenues exceed $20 million annually from gas sales of 700 MMcf and propane sales of 25 million gallons. NSP distributes gas to more than 475,000 customers in Minnesota, Wisconsin, North and South Dakota, Michigan and Arizona, in addition to providing electricity to about 1.5 million customers in the upper Midwest.

The stock-for-stock exchange will be accounted for as a pooling of interests and requires approvals from the Minnesota Public Utilities Commission and the North Dakota Public Service Commission. It is not expected to affect NSP's proposed merger with New Century Energies of Denver.

Joe Fisher, Houston

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