DTE, MCN Propose Merger Solution
To resolve concerns raised by the Federal Trade Commission over
the proposed merger of DTE Energy and MCN Energy, MCN has agreed to
transfer a property interest to a unit of Unicom Corp. that would
allow for the use of up to 20 Bcf of natural gas transportation
capacity annually on MCN's Michigan Consolidated Gas Co. system in
the relevant distribution area.
DTE and MCN, both based in Michigan, announced the proposal last
week to address FTC's related review of the companies' proposed
merger, which was first announced in October 1999 (see NGI, Oct.
11, 1999). FTC staff is now reviewing the impact of the proposal.
If approved, DTE would become the largest energy utility in
When the merger is completed, the new DTE will have
approximately 11,500 employees, serving 2.1 million electric
customers and 1.2 million natural gas customers in Michigan. It
will have an energy portfolio consisting of more than 11,000 MW of
generating capacity, 600 Bcf/year of natural gas deliveries and 185
Bcf of natural gas storage capacity, with assets totaling more than
$17 billion and annual revenues exceeding $6 billion. DTE will also
gain MCN's 25% interest in the Vector Pipeline project, 10.5%
interest in the Millennium Pipeline project and 23% interest in the
Portland Natural Gas Transmission System Pipeline project.
It's intrastate rival, CMS' Consumer's Energy, has 1.6 million
electric customers and 1.5 million gas customers. Overall, CMS
Corp. has annual sales of about $6 billion and assets of about $14
DTE's principal operating subsidiary is Detroit Edison, which
serves more than 2.1 million customers in the southeastern part of
the state. MCN's largest subsidiary is MichCon, serving 1.2 million
customers in more than 500 communities in the state.
FTC staff is concerned about the possible loss of competition
between DTE's Detroit Edison and MCN's MichCon utility subsidiaries
in their coincident retail distribution areas. The agreement is
still subject to regulatory approval. DTE and MCN began discussions
with FTC staff last November as part of the agency's review of the
merger under the Hart-Scott-Rodino Act.
Unicom currently markets natural gas to customers in the Detroit
area and has initiatives under way to participate as demand for
distributed generation technologies develop in the state.
Anthony F. Earley Jr., CEO of DTE, said he believes that the new
proposal should suit FTC concerns. "While we can't predict the
timing or outcome of FTC's investigation, it remains our objective
to close this merger in the fourth quarter."
Carolyn Davis, Houston
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