Minneapolis-based Northern States Power Co. will add about 5,000natural gas and 15,000 propane customers in four states through theacquisition of Natrogas Inc., also of Minneapolis. The dealrequires regulatory approval.

Natrogas subsidiary Western Gas Utilities Inc. serves 5,000 gascustomers in Minnesota. NSP and Western will merge, and the gascustomers will become part of the regulated NSP gas utility’soperation and be served from NSP’s St. Cloud, MN, regional office.

“Merging Western into NSP Gas will give us access to a growingarea west of Minneapolis. The addition of the Natrogas propanebusiness moves NSP closer to becoming the single provider of ourcustomers’ energy needs,” said Cyndi Lesher, NSP Gas president. Shesaid NSP provides electricity to most of the natural gascommunities served by Western and also has electric operations inmany of the propane communities.

Natrogas of Minneapolis provides retail and wholesale liquefiedpropane service to 15,000 customers in 20 locations throughoutMinnesota, Wisconsin, North Dakota and South Dakota. Propaneoperations will become a subsidiary of NSP through astock-for-stock deal. Steve Neidermire, manager of new businessdevelopment for NSP Gas, will become general manager and chiefoperating officer of the propane operations when the merger iscompleted. Also part of the deal is Natrogas’ wholesale propanebusiness, North American Energy Inc., in Hankinson, ND.

“Historically, we’ve worked with the company and kind of alwaysbeen interested in their natural gas piece, as well as other LDCsin the area,” Neidermire said. “I think it’s really the combinationand the size of the company that attracted us. It’s local.Certainly the natural gas customers fit very well with our existingservice territory, and it’s a growth area.” There are no plans toexpand the LDC assets to be acquired, Neidermire said, other thanto accommodate growth. He said the company will benefit fromcombining gas supply and transportation contracts with its existingLDC business.

Other NSP gas acquisitions in the last few years are Natural GasInc. of Richmond, WI, and Black Mountain Gas Co. of Cave Creek, AZ,near Phoenix.

Natrogas revenues exceed $20 million annually from gas sales of700 MMcf and propane sales of 25 million gallons. NSP distributesgas to more than 475,000 customers in Minnesota, Wisconsin, Northand South Dakota, Michigan and Arizona, in addition to providingelectricity to about 1.5 million customers in the upper Midwest.

The stock-for-stock exchange will be accounted for as a poolingof interests and requires approvals from the Minnesota PublicUtilities Commission and the North Dakota Public ServiceCommission. It is not expected to affect NSP’s proposed merger withNew Century Energies of Denver.

Joe Fisher, Houston

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