Dive Brief:

• Dominion Resources Inc. announced on Monday it has struck a deal to buy natural gas distributor Questar Corp. for $4.4 billion in an all-cash deal, SNL reports. 
• The deal with Utah-based Questar would expand Dominion's customer base to create a combined entity with 2.5 million electric and 2.3 million gas customers in seven states.  
• The deal comes as a number of electric utilities are expanding their investments in natural gas production, transportation and storage. 

Dive Insight:

Questar, headquartered in Salt Lake City, is a natural gas distribution, pipeline, storage and supply company serving nearly one million customers in Utah, Wyoming and Idaho. The aquisition of the company will help bring predictable returns to Dominion ratepayers from gas customers and diversify Dominion's operations. 

"Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments," Thomas Farrell, CEO of Dominion, said in a statement. "These high-performing regulated assets will improve Dominion's balance between electric and gas operations and provide enhanced scale and diversification into Questar's regulatory jurisdictions.

The Virginia-based company expects the deal to enhance the geographic diversity of the company's natural gas operations and deliver additional benefits as more utilities turn to natural gas for power generation.

"Dominion's existing operations lie in the heart of the mid-Atlantic, whereas Questar's system is the "hub of the Rockies" and a principal source of gas supply to Western states," the company said in a statement. "Dominion expects the value of the Questar pipeline system to rise over time as Utah and other Western states seek to comply with the requirements of the U.S. Environmental Protection Agency's Clean Power Plan and meet state-mandated renewable standards, with increasing reliance on low-carbon, gas-fired electric generation."

The Dominion deal comes as a number of utilities are pushing to expand their natural gas operations to take advantage of record low prices for the resource and benefit from emissions regulations they expect will enhance demand for gas in the future.

Last fall, Duke announced a similar deal to acquire Piedmont Natural Gas, and it has partnered with Dominion on the $5.1 billion Atlantic Coast pipeline slated to run from West Virginia to North Carolina. Utilities in the Northeast of the country, hampered by high prices and gas supply constraints, have petitioned regulators to allow them to purchase gas transportation capacity. In Florida, investor-owned utility Florida Power & Light has taken the trend a step further, winning approval from regulators last year to invest directly in gas production in Oklahoma. 

Dominion's deal with Questar deal must still pass muster with the Federal Trade Commission and the Public Utilities Commissions of both Utah and Wyoming. Dominion and Questar will also provide information to Idaho power regulators, SNL reports. If approved, the combined entity would have access to more than 15,500 miles of natural gas transmission, gathering and storage pipelines, along with about 24,300 MW of generation.