The Pennsylvania Public Utility Commission (PUC) Friday approved a settlement agreement allowing Equitable Resources Inc. to buy Dominion Peoples. But shortly thereafter, the Federal Trade Commission (FTC) filed in federal court for a temporary restraining order and preliminary injunction to stop the $970 million acquisition.
One year ago Dominion Resources said it had reached a deal to sell its natural gas utilities in Pennsylvania and West Virginia to Pittsburgh, PA-based Equitable Resources (see Daily GPI, March 3, 2006). The FTC said last month that it would seek to block the deal if it was approved by the PUC (see Daily GPI, March 19). Dominion spokesman Dan Donovan told NGI the company would fight the FTC's injunction.
The FTC complaint, filed in the U.S. District Court for the Western District of Pennsylvania in Pittsburgh, seeks a temporary restraining order and preliminary injunction under Section 13(b) of the Federal Trade Commission Act to enjoin the proposed acquisition. The federal district court complaint alleges that the acquisition would lead to higher prices for the local distribution of natural gas to nonresidential customers in some areas of western Pennsylvania.
The complaint alleges that Equitable and Dominion exercise market power "through price discrimination, charging nonresidential customers for whom they do not compete the maximum regulated tariff, while providing discounts for customers for whom they do compete. Equitable and Dominion are the most significant, if not the only, constraints on each other's ability to raise prices."
Equitable is seeking to acquire Dominion Peoples' gas distribution system, which covers 9,400 square miles in southwestern Pennsylvania and serves more than 350,000 customers; Dominion Peoples' midstream gas system, which spans 861 gathering miles and has 44.6 Bcf of throughput capacity; and storage facilities, which include 33.2 Bcf of onsystem storage and 10.8 Bcf of offsystem storage. The deal also calls for Equitable to acquire Dominion Hope, which serves customers in West Virginia, but the FTC is not challenging that aspect of the proposed acquisition. Dominion Peoples and Dominion Hope are owned by Dominion Resources of Richmond, VA.
If completed the acquisition, which was announced in March 2006, would make Equitable the largest gas service provide in Pennsylvania and second largest in West Virginia. Dominion Peoples and Dominion Hope would be integrated into the operations of Equitable Gas Co., a division of Equitable Resources. The addition of 475,000 gas utility customers would triple The Equitable Gas customer base to more than 750,000, according to the company.
Dominion Resources picked up the two gas utilities when it acquired Consolidated Natural Gas of Pittsburgh in early 2000. With the proposed acquisition, Equitable Resources said it is returning the Peoples' utility to Pittsburgh ownership.
Copies of the complaint are available from the FTC's website at www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Ave., NW, Washington, DC 20580.
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