THE SOURCE - Summer 2016 - (Page 12)

The Merger Highlights Three significant acquisitions were announced within the span of a few months last fall. At press time, all of the mergers were expected to be completed in 2016. A look at the key players: * Atlanta-based Southern Company, which serves 4.5 million customers in the southeast, is acquiring AGL, also based in Atlanta and serving 4.5 million customers. The deal is worth $8 billion. * Duke Energy is in the process of acquiring Piedmont Gas in a $4.9 billion deal. The two entities-both North Carolinabased-were partners in a $5 billion Atlantic Coast Pipeline project. Duke energy serves 7.3 million electric customers in six states in the southeast and midwest. Piedmont serves more than 1 million customers in North Carolina, south Carolina and Tennessee. * Canadian energy company emera moved to acquire TeCO energy, which operates as Tampa electric, Peoples Gas system and New mexico Gas Co. TeCO is in the process of selling off its interests in coal mining. Once the deal is complete, emera-which focuses on clean energy-will have more than $20 billion in assets and more than 2.4 million electric and gas customers. feature Major Mergers Gas and Electric Industries Undergo Significant Reshaping Following Three Mergers T By sandy smith hree major mergers/acquisitions of gas suppliers in just a few short months are reshaping the gas and electric industries. But does it signal more? Bert Kalisch, APGA president and CeO, says he has not seen anything like it in his nearly two decades with the organization. "I've seen mergers before, producer with producer or pipelines merging, but not the significant mergers that we saw last fall." Drew evan, AGL resources president and CeO, sees it as a "continuation" of a "steady consolidation of both natural gas and electric utilities. The primary impetus is a natural drive toward economies of scale. managing larger entities is more efficient, leads to greater standardization, and provides for more economical access to capital. I expect the trend to continue as the utility industry generally is very fragmented." Evolution and Synergy so what is driving the changes? The mergers themselves offer a few insights. emera, for instance, touts its commitment to clean energy; natural gas certainly fits that bill. Two of the three-Duke/ Piedmont and AGL/southern-feature contiguous or overlapping markets. Kalisch sees the opportunity to increase shareholder value as another key driver. "energy is the lifeblood of the American economy," he said. "We're seeing a lot of evolution taking place right now with power and gas, a lot of synergies going on." 12 THE SOURCE | THE vOICE and CHOICE Of pUblIC gaS That gas providers are so appealing to electric portfolios speaks to the value of the assets of both power and pipelines, Kalisch believes. Add in the relative regulatory ease of building a gas-fired generation plant-compared to coal, at least-and electric providers have conquered their biggest vulnerability: reliability. "The united states has more than a 100-year supply of natural gas to meet the nation's growing energy demands," evan said. "In our particular case, gas-and gas competency-is playing an increasingly important role in electricity generation. As energy companies look to diversify their energy portfolios and offer customers more choices, they are recognizing the importance of natural gas as a key part of our nation's energy future." David Trusty, Piedmont's managing director of corporate communications, points to the increasing importance of natural gas in energy consumption in recent years. "If you look at just North Carolina alone, in 2000 the percentage of power-generation fueled by natural gas

Table of Contents for the Digital Edition of THE SOURCE - Summer 2016

First Person
APGA Events
Expanding Your Network Through the Virtual Pipeline
Major Mergers
Q&A: Barry Russell
The Very Different Field of Commercial Foodservice Research and Development
Can Natural Gas Stay Cheap Forever This Time?
Home Fueling for Natural Gas Vehicles
Legislative Outlook
The Pipeline
Marketing Matters
Advertisers’ Index/
At Last

THE SOURCE - Summer 2016