Eversource Enters Agreement To Acquire Gas Utility With Choice Program, Notes Potential For "Reduced Gas Supply Costs"
February 27, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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Eversource Energy announced that it has reached an agreement to purchase the Massachusetts natural gas assets of Columbia Gas for $1.1 billion from NiSource.
Columbia Gas currently serves 330,000 natural gas customers in more than 60 communities in Massachusetts.
Eversource (Nstar) has 300,000 natural gas customers and 1.5 million electric customers in 51 communities in Massachusetts. Many communities that Columbia Gas serves with natural gas already receive electric service from Eversource.
Under the asset purchase agreement, liabilities related to the September 2018 gas distribution incidents in the Merrimack Valley will remain the responsibility of Columbia Gas’s current parent company, NiSource.
Eversource said that customer benefits under the transaction include, among other things:
• "Potential for reduced gas supply costs and increased reliability through portfolio optimization and management"
• "Expanded opportunities to benefit from Eversource’s #1 in the nation energy efficiency programs"
• "Improved potential to participate in demand response and other clean energy initiatives that Eversource is undertaking"
The agreement provides for a purchase price of $1.1 billion in cash, subject to adjustment based on Columbia Gas of Massachusetts' net working capital as of the closing. The purchase price represents a loss compared to the book value of Columbia Gas of Massachusetts.
NiSource said that under the terms of the agreement, Eversource will acquire, with certain additions and exceptions, (1) substantially all of the assets of Columbia Gas of Massachusetts, a wholly-owned subsidiary of NiSource, and (2) all of the assets held by any of Columbia Gas of Massachusetts' affiliates that primarily relate to the business of storing, distributing or transporting natural gas to residential, commercial and industrial customers in Massachusetts, as conducted by Columbia Gas of Massachusetts
Eversource said that the transaction is expected to be accretive to Eversource’s earnings per share in the first 12 months after closing. The company plans to finance the transaction with a balance of new equity and debt that maintains its strong credit profile.
The transaction will require approval from the Massachusetts Department of Public Utilities and the U.S. Justice Department under the Hart-Scott-Rodino Act.
The parties expect to close the transaction by the end of the third quarter 2020.