UGI Corp. said Thursday its Pennsylvania natural gas and electric utility, UGI Utilities, Inc., acquired the natural gas utility assets of PG Energy from Southern Union Co.for an estimated $580 million.

The acquisition of PG Energy, now known as UGI Penn Natural Gas, Inc., will add approximately 158,000 customers to UGI’s existing utility operations in Pennsylvania. UGI Penn Natural Gas serves gas customers in 13 counties in northeastern and central Pennsylvania, including the cities of Scranton, Wilkes-Barre and Williamsport.

“In addition to benefiting customers and the communities served, we expect the financial results of UGI Penn Natural Gas to be accretive to earnings in the first full fiscal year of our ownership,” said UGI Chairman Lon R. Greenberg.

UGI of Valley Forge, PA, is a holding company with propane marketing, utility and energy marketing subsidiaries. Wholly owned subsidiary UGI Utilities serves approximately 307,000 natural gas customers in 14 Pennsylvania counties, including the cities of Allentown, Bethlehem, Easton, Harrisburg, Lancaster, Lebanon and Reading, and approximately 62,000 electric customers in two northeastern Pennsylvania counties near Wilkes-Barre.

UGI completed the deal within a week of the Pennsylvania Public Utility Commission conditionally approving the purchase of PG Energy, a key natural gas distributor in the central part of Pennsylvania.

Earlier in the year, PG Energy parent Southern Union moved its headquarters from Wilkes-Barre to Houston, TX. However, with the sale of PG Energy to UGI, the utility will once again report to corporate headquarters in Pennsylvania.

Southern Union has been transforming itself in recent years from predominantly distribution operations to one of the largest pipeline owners and operators. The company said it was selling its Pennsylvania distribution utility to help fund its $1.6 billion purchase last March of Sid Richardson Energy Services Company, a natural gas gathering and processing company based in Texas (see Daily GPI, Dec. 19, 2005).

Since the turn of the century Southern Union says it has been able to take advantage of distress asset sales of energy companies hit by the crash of gas and power trading operations. In 2003 it bought Panhandle Energy, including Panhandle Eastern and Trunkline LNG interstate pipelines and Panhandle’s Lake Charles, LA LNG receiving terminal from CMS Energy.

In 2004 it partnered with GE Commercial Finance Energy Financial Services in acquiring the leftover properties of bankrupt Enron Corp., CrossCountry Energy for $2.45 billion. That acquisition included Transwestern Pipeline and a 50% interest in Citrus Corp., which owns Florida Gas Transmission.

Southern Union now owns 22,000 miles of gathering and transportation pipelines, 10 Bcf/d of transport capacity and 87 Bcf of storage. The company also still owns LDCs Missouri Gas Energy and New England Gas Co.

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