Merger of Gas, Power Associations Eyed
In response to the rapid consolidation of the natural gas and
electricity industries, the head of a major gas pipeline
association said he plans to initiate talks soon with other
Washington D.C.-based energy trade groups about possibly merging
into one organization.
Jerald Halvorsen, president of the Interstate Natural Gas
Association of America (INGAA), said he will meet with David
Parker, president of the American Gas Association (AGA); Thomas
Kuhn, president of the Edison Electric Institute (EEI); and Lynne
H. Church, executive director of the Electric Power Supply
Association (EPSA), in the "next three or four weeks" to broach the
idea of merging the energy associations. EEI represents
investor-owned utilities, while the EPSA is a national trade group
for competitive power suppliers.
The Nuclear Energy Institute (NEI), a trade group for nuclear
power generators, "could be part of the puzzle too," he told NGI.
But the trade groups representing natural gas producers won't be
included, according to Halvorsen. "It would be far too
complicated." Any merger effort "would focus on [the trade groups
representing] generation, distribution and transmission" companies
in both the gas and electricity industries.
The member companies of the energy associations are putting
"pressure on us" to move in this direction, Halvorsen noted. "The
way the companies are merging, energy associations will either go
out of business or consolidate." He believes that merging the
associations is "very definitely" and "absolutely" in the cards;
the big question is how will this be accomplished.
He sees three possibilities: merging all of these electric and
gas associations under one roof; creating two associations --- one
for regulated gas and electric companies and the other for
unregulated companies; or creating three associations --- one for
energy distribution, another for energy generation and a third for
Halvorsen indicated the industry would have to establish a
blue-ribbon task force, comprised of representatives from various
sectors of the energy business, to investigate each of the
alternatives. The associations' "dues payers are going to have to
drive the process." Due to the size of the task, he also believes
it will be necessary to hire a management consultant.
Halvorsen hopes to have a status report on the merger effort for
INGAA's board of directors by April. If AGA, EEI, EPSA and NEI go
along with a merger, it would be at least two to three years before
it would occur, he said.
INGAA is feeling the pinch of the mergers of major pipeline
companies. Earlier this month, it had to cut three executives from
its staff in response to the loss of members and dues. Halvorsen
said the number of INGAA's pipeline members has been halved in the
past five years, dropping to 16 from 32. This represents a
staggering financial loss for INGAA, considering that dues for
individual pipeline members are capped at $475,000.
He conceded that any merger of the associations could put him
and the heads of other energy trade groups out of jobs, but "we're
all big boys, we can take it." Susan Parker