Consolidated Natural Gas Co. followed through on its plan toexit wholesale energy marketing yesterday by selling its gasmarketing operations, including supply, sales, storage andtransportation agreements, to Sempra Energy for $48 million.

The Pittsburgh-based utility holding company announced plans toexit the wholesale business in April following a $17.2 millionfirst-quarter loss. CNG took a first quarter $66 million pretaxcharge against earnings to cover discontinuing wholesaleoperations, including the layoff of 125 employees. Sempra said itintends to pick up only 10 CNG staffers in the acquisition.

At the time of the CNG announcement in April, Chairman GeorgeDavidson said the company planned to concentrate on expanding itsretail energy marketing operations, exploration and production, anddistribution businesses because margins were nonexistent inwholesale marketing. CNG also is discontinuing its wholesale powermarketing operations, which sold 7.5 million MWh in the firstquarter, but a spokesman said a sale of its power contracts isn’tlikely. The power contracts are being phased out.

CNG’s gas operations will give Sempra a quick boost in theNortheast and Midwest, adding about 3.1 Bcf/d of commodity tradingcontracts with local distribution companies, municipalities andmajor industrial corporations to Sempra’s 3.5 Bcf/d operation. Italso includes a 10 Bcf chunk of working storage capacity on CNGTransmission, Transco, Tetco, East Ohio and TransCanada, and 600MMcf/d of capacity on 10 eastern pipelines.

Sempra said the acquisition sharply increases its ability tomove gas to virtually all local gas distribution companiesthroughout the eastern half of the country. “We see substantialbenefits from this acquisition, including an expansion of ourcommodity trading activities with municipal and utility customersand the addition of long-term contractual relationships with anumber of blue-chip industrial customers,” said David Messer,president of Sempra Energy Trading. “This deal also allows us tobuild on our already strong market position in the Northeast andMidwest.” It puts Sempra “firmly within the top-10 natural gastraders in the United States.”

Messer said Sempra is “comfortable the purchasing pricerepresents good value. I do not know why CNG was unable to makemoney in this business. As you know there are many energy marketingcompanies, ourselves among them, who are profitable in the energytrading business. This set of contracts will complement ouroperations very nicely.” The deal is expected to be completed inAugust following regulatory approval.

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