Virginia’s State Corporation Commission (SCC) said it plans touse the full 180 days allowed by Virginia law before ruling onDominion Resources’ merger with CNG. The announcement was made justtwo weeks after CNG cited fewer potential regulatory problems as amain reason for selecting the Dominion bid over a hostile offerfrom Columbia Energy Group (See Daily GPI, May 13). If the SCCtakes the full 180 days, a decision would not be reached until Nov.17.

The SCC said the hold-up is due to the potential combination ofVirginia Natural Gas (VNG), a CNG subsidiary serving 220,000customers in various parts of the state, and Virginia Power, aDominion subsidiary serving two million people in central, northernand eastern Virginia. The SCC said it will explore how the mergerwill affect VNG’s ability to provide adequate service to itscustomers at “just and reasonable rates.”

“The decision was made due to the size and scope of the entitiesinvolved,” said Ken Schrad, a spokesman for the SCC. “You’redealing with the largest provider of power in the state and thethird-largest gas provider. The process is definitely a hurdle forthe two companies, but it is too early to tell if they will clearit or not.”

Schrad pointed to a large merger in another industry, BellAtlantic’s pending combination with GTE, as an example of the SCC’sscrutiny. “There was a case of two large companies seeking tocombine. The SCC took the 180 days to rule on that one, and ruledagainst the merger. Right now the two companies are delayed andback at the drawing board.”

Dominion and CNG, however, remained confident that theirtimetable of having complete regulatory approval by the year’s endwill not be tested. “We accounted for this and as far as we cansee, the merger is right on schedule,” said Hunter Applewhite, aDominion Resources spokesman.

In related news, Applewhite said the company was exploring theoption of selling Dominion Capital, the company’s financialservices arm, to help pay for the $6.4 billion purchase. “Its verypreliminary right now, but it has been discussed,” Applewhite said.”Being primarily an energy company, we see Dominion Capital as anon-core asset.” The financial services company employs 1,000people. Its subsidiaries include two lending companies, a mortgagecompany 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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