Transfer of Storage Assets Under Sale of Equitable Gas to Peoples Natural Gas Could Harm Retail Market, Suppliers Say

The acquisition of Equitable Gas Company, LLC by Peoples Natural Gas could negatively impact the retail market due to the transfer of certain storage assets to an Equitable affiliate under the transaction, Dominion Retail, Inc. and Interstate Gas Supply, Inc. said in a petition to intervene.

The retail suppliers said that PNG's and Peoples TWP LLC's indirect affiliates are seeking to acquire substantially all of Equitable Gas Company, in exchange for a monetary payment and the assignment of PNG's storage and deliverability facilities to Equitable's Federal Energy Regulatory Commission (FERC) regulated affiliate

"The NGS Parties will be directly and negatively affected by the merger, because it would cause the transfer of critical storage and deliverability assets that are currently used to provide natural gas supply service -- whether it be provided by an NGS or by the NGDC -- to an affiliate of Equitable as part of this transaction. This transfer would cause PNG to lose control of these critical assets, and could have a material impact on the costs of NGSs operating on the PNG system, which will negatively impact their business and customer contracts as well as reduce their willingness to enter into contracts with consumers in the future," the retail suppliers said.

"This asset transfer and the attendant changes to business requirements also could dampen the desire of new suppliers to enter the market. Finally, and critically, the transfer of assets will cause the Commission to lose jurisdiction," the suppliers added.

"The NGS Parties are continuing to review the publically available portions of the above-captioned filing, but have already determined that the transfer of assets from PNG to Equitable's affiliate, particularly the storage and transportation assets, will result in a severe degradation of the currently favorable conditions on the PNG system and may also have a wider negative impact. The NGS Parties believe, therefore, that while the merger itself may appear to be appropriate, that the transfer of assets, which appears to be a critical component thereof, is not. The NGS Parties submit that the asset transfer will result in real and irreparable harm both to customers and to NGSs serving on the PNG system," the suppliers said.