Consolidated

In a rumor that first broke late last week, Consolidated Edison(ConEd), a combination utility serving over three million electricand one million gas customers in New York, is reported to be inmerger talks with West Springfield, MA-based Northeast Utilities(NU), the largest electric utility in New England. Neither companywould comment on the subject. The reported stock and cash dealwould value NU at $2.8 billion.

Consolidated Natural Gas announced that Ronald L. Adams, seniorvice president, regulated business, has decided to leave thecompany effective Sept. 1, triggering an interim managementrestructuring for local gas distribution, pipelines and storageuntil the previously announced merger with Dominion Resources iscompleted. As a result, the following personnel appointments havebeen made: Jimmy D. Staton, has been appointed senior vicepresident, distribution operations; Gary L. Sypolt, has beenappointed senior vice president, pipeline operations; Paul D.Koonce, has been named senior vice president, commercialoperations; and William A. Fox has been named senior vicepresident, Virginia gas distribution.

The proposed merger of Dominion Resources Inc. (DRI) withConsolidated Natural Gas Co. (CNG) is making a lot of energy peoplein and around Virginia very nervous. So much so they have askedFERC to either reject the combination of the two companies outrightor place “stringent” conditions on the marriage.

Dominion Resources Inc. and Consolidated Natural Gas Co. (CNG)have agreed to sell CNG’s Virginia Natural Gas (VNG) distributionsubsidiary in exchange for Virginia regulators’ support for theirproposed merger.

Consolidated Natural Gas paid a hefty price during the secondquarter for its proposed merger with Dominion Resources. Thecompany took a one-time $165.3 million, $1.12/share, charge relatedprimarily to cash-out of stock options and awards to about 700employees and took another $6.3 million charge, $0.04/share, for aworkforce reduction related to the merger. CNG reported a secondquarter loss from continuing operations of $80 million, or 83 centsa diluted share, compared with income of $46.8 million, or 49 centsa diluted share, a year earlier. The comparison was made worse by a$13.9 million, or $0.15/share, gain in 2Q98 related to a favorableregulatory decision. Excluding special items for both periods,income from continuing operations was 33 cents a diluted share in2Q99, compared to 34 cents in 2Q98. Wall Street consensus had CNGpegged quite a bit higher at $0.39/share.

El Paso Energy’s Tennessee Gas Pipeline and Consolidated NaturalGas’ CNG Transmission jointly unveiled the Atlantic AllianceProject on Monday. If successful, this project will transport up to750,000 Dth/d from Chicago market center and the Niagara ImportPoint into eastern markets.

Dominion Resources Inc. and Consolidated Natural Gas Co.shareholders approved the merger of the companies to create thelargest fully integrated gas and electric company in the U.S.

Consolidated Natural Gas Co. E&P subsidiary CNG ProducingCo. agreed to buy interests in Lopeno and two adjacent South Texasgas fields. Earlier in the year, CNG Producing bought about a 50%interest in the Lopeno field, and together with the most recentpurchase, CNG Producing will own nearly 100%. On a combined basis,the company will pay $125 million for the two transactions.

Dominion Resources and Consolidated Natural Gas filed with theFederal Energy Regulatory Commission for approval of theirpreviously announced merger plan. With yesterday’s submission, thecompanies have completed all regulatory filings necessary formerger approval. The companies said in the joint filing that themerger plan satisfies requirements of Section 203 of the FederalPower Act. FERC must approve the transfer of the power marketingsubsidiaries of CNG to Dominion Resources under Section 203. Inaddition to filing with FERC, the companies have completed mergerfilings with the U.S. Securities and Exchange Commission (SEC) andwith public utility commissions in Virginia, North Carolina,Pennsylvania and West Virginia.