To resolve concerns raised by the Federal Trade Commission overthe proposed merger of DTE Energy and MCN Energy, MCN has agreed totransfer a property interest to a unit of Unicom Corp. that wouldallow for the use of up to 20 Bcf of natural gas transportationcapacity annually on MCN’s Michigan Consolidated Gas Co. system inthe relevant distribution area.

DTE and MCN, both based in Michigan, announced the proposal lastweek to address FTC’s related review of the companies’ proposedmerger, 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 inMichigan.

When the merger is completed, the new DTE will haveapproximately 11,500 employees, serving 2.1 million electriccustomers and 1.2 million natural gas customers in Michigan. Itwill have an energy portfolio consisting of more than 11,000 MW ofgenerating capacity, 600 Bcf/year of natural gas deliveries and 185Bcf of natural gas storage capacity, with assets totaling more than$17 billion and annual revenues exceeding $6 billion. DTE will alsogain MCN’s 25% interest in the Vector Pipeline project, 10.5%interest in the Millennium Pipeline project and 23% interest in thePortland Natural Gas Transmission System Pipeline project.

It’s intrastate rival, CMS’ Consumer’s Energy, has 1.6 millionelectric customers and 1.5 million gas customers. Overall, CMSCorp. has annual sales of about $6 billion and assets of about $14billion.

DTE’s principal operating subsidiary is Detroit Edison, whichserves more than 2.1 million customers in the southeastern part ofthe state. MCN’s largest subsidiary is MichCon, serving 1.2 millioncustomers in more than 500 communities in the state.

FTC staff is concerned about the possible loss of competitionbetween DTE’s Detroit Edison and MCN’s MichCon utility subsidiariesin their coincident retail distribution areas. The agreement isstill subject to regulatory approval. DTE and MCN began discussionswith FTC staff last November as part of the agency’s review of themerger under the Hart-Scott-Rodino Act.

Unicom currently markets natural gas to customers in the Detroitarea and has initiatives under way to participate as demand fordistributed generation technologies develop in the state.

Anthony F. Earley Jr., CEO of DTE, said he believes that the newproposal should suit FTC concerns. “While we can’t predict thetiming or outcome of FTC’s investigation, it remains our objectiveto close this merger in the fourth quarter.”

Carolyn Davis, Houston

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