Dive Brief:

• Canadian company AltaGas Ltd. has proposed acquiring WHL Holdings, the corporation which owns mid-Atlantic Washington Gas and has a growing contracted midstream franchise in the Marcellus and Utica shale plays. 
• The $6.4 billion deal would include other entities owned by WGL, including WGL Energy, WGL Midstream and Hampshire Gas. The company also owns non-regulated power and energy marketing businesses in the United States.
• SNL Energy notes the deal builds on a trend of Canadian companies purchasing utilities in the United States. Previous deals include acquisitions by Fortis Inc., Emera Inc. and Algonquin Power & Utilities, and industry observers expect more deals to be announced.

Dive Insight:

Utility-sector consolidation will continue in 2017, judging by AltaGas' bid last week. Falling electric demand, low gas prices and the evolving power mix has primed the market for a continuing trend of consolidation, analysts told Utility Dive. WGL's interests go beyond just gas delivery, however. 

In addition to the more than 1 million customers it serves in the D.C. area, WGL Holdings has stakes in Marcellus and Utica Shale pipelines with agreements to sell LNG at the Cove Point LNG facility, expected to be online later this year. AltaGas President and CEO David Harris said in a statement that the deal will provide the company with a "robust, complementary set of energy businesses that greatly increase our scale and diversity."

Harris also said the company's first priority "is to continue serving WGL's customers and communities with safe, reliable and affordable service." The company serves about 1 million gas customers in the Washington, D.C., region.

"The strategic fit and compatibility of our two companies is exceptional. Both companies are strong utility operators, have a sweet spot of pipeline and midstream investments in premier supply basins, and have power generation businesses weighted to clean energy and innovations," Harris said.

The deal follows other Canadian acquisitions of U.S. utilities, including: Fortis’ acquisition of ITC, an independent transmission company based in Novi, MI.; Emera's acquisition of Tampa Electric Co., and Algonquin Power & Utilities acquisition of Empire District Electric.

The deal was the second big announcement from AltaGas last week. The AltaGas Pomona Energy Facility, built by one of its subsidiaries in southern California for Southern California Edison, was one of the projects formally commissioned in response to the Aliso Canyon gas leak that threatened generator fuel supplies in the region.

WGL also has "a significant existing portfolio of clean power assets that generate stable cash flows," the companies said in their joint statement, and is positioned to grow its solar, wind, fuel cell, battery storage and other resources, including gas generation. WGL serves more than a quarter million customers through its retail energy services business in Maryland, Virginia, Delaware, Pennsylvania and the District of Columbia.