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Oneok Sues AZ over ACC Staff Behavior

Oneok Sues AZ over ACC Staff Behavior

The Southwest Gas merger soap opera took another turn recently as Oneok, the former merger partner of Southwest, announced it is pursuing lawsuits against the Arizona Corporation Commission (ACC), the state of Arizona and specific members of the ACC staff for their roles in interfering with the merger. Oneok said it is willing to settle its claims for $85 million.

In a notice sent to the Attorney General of Arizona, the ACC, the Commission Chairman Carl Kunasek and one of his aides, Gerald Porter, Oneok accused Kunasek and Porter of defaming the company, resulting in "Oneok's having to defend, at great expense, claims that lack legal merit." The collaboration of Chairman Kunasek and Porter with Southern Union "makes them, the State and the ACC liable for interference with the Oneok/Southwest Gas merger and Oneok's loss of the benefits of that transaction."

The lawsuit alleges several acts of wrongdoing by Kunasek and Porter, including using the merger as a way to enact political revenge against ACC Commissioner Jim Irvin, illegal contact with Southern Union, negligence, breach of contract, abuse of process and aiding and abetting unfair competition.

Oneok broke off the merger with Southwest Gas last January, citing a stipulation in the merger agreement that said certain conditions hadn't been met and did not look like they would be met in the pre-determined period of time. The consequences from that decision came fast and furious. Southern Union, which had been trying to break the merger ever since Southwest spurned Southern Union in favor of Oneok, said it would continue to pursue its lawsuit against Southwest Gas. Southwest Gas proceeded to sue Oneok for "unjustly attempting to cancel the merger agreement (see Daily GPI, Jan. 24, Jan. 25 and Jan. 26).

The Oneok and Southwest merger would have created the largest stand-alone natural gas distribution network in the U.S. Oneok currently serves customers in Oklahoma and Kansas, and Southwest serves Arizona and parts of California and Nevada.

And now the Tulsa, OK-based Oneok has joined the suing circus. While the company is only seeking $85 million, it said in the notice that "actual damages exceed many multiples of that sum."

"In short," Oneok said in the notice, "Southern Union used information from Chairman Kunasek, Mr. Porter and the ACC merger proceeding to pursue claims against Oneok that lacked legal merit as part of its continuing effort to disrupt the Oneok/Southwest Gas merger; [Kunasek] and Mr. Porter used information from the litigation between Oneok and Southern Union to pursue their plan of discrediting Commissioner Irvin...and in the process, improperly question Oneok's fitness to acquire Southwest Gas..."

John Norris

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