A little more than a year after NiSource started its pursuit of Columbia Energy Group, the merger is nearing completion. Seven out of nine states have completed the necessary regulatory actions, and the proposed union is on the docket for a vote at FERC’s next regular meeting, Wednesday, July 12.

“This is moving along very well, in some respects better than planned,” said Maria P. Hibbs, NiSource spokesperson. “We are hopeful we will beat our own (end-of-the-year) deadline,” she added. It is “conceivable” that this process could be completed within two months.

Kentucky, Maine and Indiana regulators were the most recent to approve the merger.

On June 30, the Kentucky Public Service Commission (KPSC) gave its consent, as long as Columbia Gas of Kentucky (CKY) lives up to certain commitments. The merger must have no impact on the base rates for CKY’s 141,000 natural gas customers. CKY must maintain its headquarters in Lexington, and continue to help the community and contribute at current levels. CKY also must keep track of its merger savings for consideration in the next customer rates case in 18 months.

The Maine Public Utilities Commission gave its merger approval on June 30 as well, subject to certain conditions regarding Northern Utilities. Northern Utilities is a natural gas distribution unit of NiSource’s subsidiary Bay State Gas. Northern Utilities currently serves about 24,000 customers in southern Maine.

The Indiana Utility Regulatory Commission (IURC) found after deliberation, that the proposed merger would not change the IURC’s ability to monitor the activities of NiSource’s subsidiary, Northern Indiana Public Service Company (NIPSCO).

“We remain dedicated to bringing excellent energy services to Columbia customers in Kentucky, to Northern Utilities customers in Maine and to NIPSCO customers in Indiana, as well as to continue to support customer choice programs in both electricity and natural gas,” said Gary L. Neale, NiSource’s CEO.

Oliver G. Richard III, Columbia Energy’s CEO, commented, “We are working closely with NiSource to achieve a smooth transition. The progress on the regulatory approval front is just one element of the broad cooperation between the two companies, as we move ahead to the merger’s expected completion, and to bring its benefits to customers.”

Settlement deals have already been put together in the two remaining states of Virginia and Pennsylvania, but neither commission has approved it yet. The final approvals are expected to come down soon. Rulings by certain federal agencies are still necessary, including FERC and the SEC.

After a long courtship, Columbia agreed to the $6 billion transaction on Feb. 28, and the deal was approved by both sets of shareholders on June 1 and 2 (see NGI, June 14, 1999; June 5, 2000). The union is set to create a mega energy powerhouse serving nine states and more than 4 million customers, stretching from Chicago in the west to New England in the east and south to the Gulf of Mexico.

Alex Steis

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