Dive Brief:
- Yesterday the North Carolina Utilities Commission approved Duke Energy's acquisition of Piedmont Natural Gas, the final regulatory approval needed to close the transaction. It is expected to close next week.
- Commission staff in June recommended the $4.9 billion deal be approved, after the company committed to $10 million in gas bill savings for North Carolina customers in the first two years. Gas customers in South Carolina will see more than $1 million in savings.
- The acquisition adds Piedmont's 1 million gas customers in North Carolina, South Carolina and Tennessee, to Duke existing customer base of 525,000 natural gas customers and 7.4 million electric customers.
Dive Insight:
Duke's bid on Piedmont natural gas highlights a rush from utilities to invest in natural gas. Just last week, DTE invested $1.3 billion for midstream assets. Other utility deals includes Dominion's bid to buy Questar, ConEd's $975 million stake on a gas pipeline venture, and Southern Co's merger with AGL Resources.
Duke's acquisition, expected to close on Monday, adds significantly to the utility's gas portfolio, tripling its customer base, and marking the utility's return to gas business since 2007. The deal faced some backlash from opponents who said it would only increase the utility's focus on fossil fuels, but regulators were not convinced those concerns were relevant.
“Some of these risks are going to be there whether or not this merger occurs," NCUC Chairman Edward Finley said in a hearing over the summer. Ultimately, the commission determined there were significant benefits to North Carolina customers.
Duke President and CEO Lynn Good told Bloomberg the deal will help accelerate the company's transition away from coal, though the timing remains uncertain. “I think we’ll still be operating coal in 2030,” Good said. “Whether we will be in 2040 I think is a question, or in 2050.”
The deal has already been approved by the Tennessee Regulatory Authority and Piedmont's shareholders, and the United States Federal Trade Commission signed off as well.
The $4.9 billion deal includes the assumption of approximately $1.8 billion in Piedmont existing net debt, representing total enterprise value of approximately $6.7 billion. Duke said Piedmont will retain its name, and operate as a business unit of Duke Energy.
In order to move the deal ahead, the combined company committed to make annual charitable and community support contributions of at least $17.5 million in North Carolina in 2017-2020. In South Carolina, committed annual contributions during the four-year period are expected to total $3.55 million.
