Southern Union Co. has gotten a thumbs up from the PennsylvaniaPublic Utility Commission (PPUC) for its pending mergers with threeNortheast utility companies — Fall River Gas Co., ProvidenceEnergy Corp. and Valley Resources Inc. The approval, which comesthree months after Southern Union’s application was first filed, isone of several required before the merger is approved. Still tocome are approvals from utility commissions in Rhode Island,Massachusetts and Missouri, state legislatures and variousregulators in the affected states.

Southern Union has set a target date for the fall of this yearto complete the mergers, and once completed, the growing Austin,TX-based utility would serve nearly 1.6 million gas and electriccustomers in six states. Currently, it serves 1.2 million customersin Texas, Missouri, Pennsylvania, Florida and Mexico.

Fall River Gas, headquartered in Fall River, MA, servesapproximately 48,000 customers in southeastern Massachusetts. Itagreed to a definitive merger with Southern Union on Oct. 5 of lastyear (see NGI, Oct. 6, 1999). ProvidenceEnergy, which distributes and markets natural gas, heating oil, andpetroleum products, electricity, and energy services, serves 181,000customers in Rhode Island and Massachusetts, and it announced a mergeragreement six weeks after the Fall River agreement, on Nov. 15 (seeNGI, Nov. 16, 1999). Two weeks later, onDec. 1 of last year, Southern Union and Valley ResourcesInc. announced a definitive merger agreement (see NGI, Dec. 2, 1999). Valley Resources is anatural gas public utility holding company serving about 66,000customers in northeastern and eastern Rhode Island.

Valley Resources Chairman and CEO Alfred P. Degen called themerger “an opportunity for customers, employees and shareholdersalike.” He said that Southern Union “will bring its focus onworld-class customer service and its proven record of being alow-cost energy provider to our customers. Our employees will beexposed to the opportunities of being a valued part of a $1 billioncompany and our shareholders are realizing full value for theirinvestment in Valley Resources.”

In recent years, Southern Union’s growth strategy has beentoward the Northeastern part of the country, as well as Mexico.Southern Union acquired a 43% equity ownership in a natural gasdistribution company (Conagas) and other operations that currentlyserve approximately 21,000 customers in Piedras Negras, Mexico,which is across the border from Southern Union’s Eagle Pass, TX,service area. The distribution company is in an expanding marketthat officials say “affords Southern Union and several of itssubsidiaries significant growth opportunities.”

Its pipeline subsidiary, Southern Transmission Company, plans toconstruct a connecting pipeline across the Rio Grande River, whichwill enable Southern Union’s gas marketing subsidiary, Mercado GasServices inc., to provide cost-efficient gas supply into this areaof Mexico.

Its propane marketing subsidiary, SUPro Energy, provides propaneservices to an expanding customer base. SUPro’s propane customerbase has grown 29% over the last year, according to officials.SUPro works with subdivision developers to coordinate theinstallation of a pipeline grids, which provide propane toresidents until Southern Union’s natural gas infrastructure reachesnew subdivisions that are beyond its current distribution system.

Southern Union’s natural gas operating divisions includeSouthern Union Gas, Missouri Gas Energy, PG Energy and AtlanticUtilities. In Texas, Southern Union Gas serves approximately523,000 customers, including the cities of Austin, El Paso,Brownsville, Galveston and Port Arthur. Missouri Gas Energy servesapproximately 487,000 customers in western Missouri, including thecities of Kansas City, St. Joseph, Joplin and Monett.

And, in Pennsylvania, PG Energy serves approximately 154,000customers, including the cities of Wilkes-Barre, Scranton andWilliamsport. Atlantic Utilities operates in Florida.

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