Peoples Natural Gas announced today that the Federal Energy Regulatory Commission (FERC) has granted all of its required approvals related to the transaction with EQT Corporation (NYSE: EQT) for the Peoples Natural Gas purchase of EQT's natural gas distribution business, Equitable Gas Company, LLC.
Prior to today's order, the transaction received clearance by the Federal Trade Commission under the Hart-Scott Rodino Act, and approvals by the Public Service Commission of West Virginia and the Pennsylvania Public Utility Commission. The Kentucky Public Utility Commission determined that it did not have jurisdiction over the sale. Locally, the operations and management of the Equitable Gas Company will be fully merged into Peoples Natural Gas.
Morgan O'Brien, President and CEO of Peoples Natural Gas said, "The combined utility will bring great benefits to all our customers. Combining our distribution pipeline systems will create a more efficient and streamlined operating system and will enhance both safety and reliability. Our combined operation is estimated to save more than $160 million in avoided capital spend that would otherwise be paid for by customers through their utility bills."
This savings for ratepayers will occur because there will no longer be duplicative pipelines in many communities and therefore in those areas, two sets of pipelines will no longer have to be maintained or replaced. The Pittsburgh metro region is the only area in the nation where there are multiple natural gas distribution companies operating a web work of redundant pipelines.
In addition to the capital spend savings the transaction creates, the combined company will be more cost efficient in avoiding duplicative administrative costs and be more efficient in serving one combined group of customers. These cost efficiencies will allow the combined company to freeze the distribution rate portion of all customers' utility bills until 2018, but at the same time Peoples Natural Gas has further pledged to invest $500 million in new infrastructure improvements over the next 5-year period that will greatly enhance the safety and reliability of its system.
O'Brien said, "We're also excited because we believe that a greater aggregation of customers will attract more marketers. That means our customers will benefit from increased competition for their gas supply needs." He continued, "Historically, gas supply costs make up about half the costs of a residential bill and an even greater proportion of the bill for most businesses. We will be using industry best practices and working with a collaborative of local natural gas suppliers and other interested parties to further promote energy choice more than ever, here in the Pittsburgh region."
Peoples Natural Gas purchased Equitable Gas for $720 million (subject to certain purchase price adjustments) and select midstream assets. "This agreement ensures both local investment and the development of regional natural gas resources to be used right here where we live. The combination of the $720 million of new capital paid to EQT for the further development of their Marcellus Shale business and the $500 million of new capital for the improvement of our local utility operating systems will greatly enhance this region's economy over the coming years," O'Brien said. "And, at the same time, there are significant direct and immediate benefits for both companies, customers, and our region. Looking forward, we want people to see what we see; that natural gas is a cleaner energy choice and having it locally produced is a benefit for the region's economy by making energy more affordable for all customers."
About SteelRiver Infrastructure Partners:
SteelRiver Infrastructure Partners is an independent investment management firm that invests in core infrastructure in North America for the long term, seeking out assets and businesses that provide essential services with stable cash flows and often regulated characteristics. SteelRiver's long term approach to infrastructure investing is characterized by a significant emphasis on value added through in-house asset management and experienced infrastructure investment professionals. SteelRiver manages an unlisted infrastructure investment vehicle with committed capital in excess of USD 1.9 billion, and approximately USD 1.8 billion of co-investor equity capital. SteelRiver's managed vehicles own energy and infrastructure assets throughout North America. For more information on SteelRiver please visit .
About Peoples Natural Gas:
Peoples Natural Gas is a regulated natural gas distribution company that transports and distributes natural gas primarily to residential and commercial customers within its delivery area in southwestern Pennsylvania, serving, together with its sister company Peoples TWP, approximately 420,000, mostly residential, customers throughout 18 counties.
About EQT Corporation:
EQT Corporation is an integrated energy company with emphasis on Appalachian area natural gas production, gathering, transmission, and distribution. EQT is the general partner and significant equity owner of EQT Midstream Partners, LP. With more than 120 years of experience, EQT continues to be a leader in the use of advanced horizontal drilling technology – designed to minimize the potential impact of drilling-related activities and reduce the overall environmental footprint. Through safe and responsible operations, the Company is committed to meeting the country's growing demand for clean-burning energy, while continuing to provide a rewarding workplace and enrich the communities where its employees live and work. Company shares are traded on the New York Stock Exchange as EQT.
About Equitable Gas:
Equitable Gas Company is a provider of safe and dependable natural gas service to approximately 275,000 residential, commercial and industrial customers located mainly in the city of Pittsburgh and Allegheny County. Its customer base also includes more than 200 municipalities in nine other counties in western Pennsylvania, 12 counties in central and northern West Virginia, and nine counties in eastern Kentucky.
