Office of the People’s Counsel Fact Sheet on the Proposed Merger of WGL & AltaGas - Formal Case No. 1142

LET YOUR VOICE BE HEARD

 

A: AltaGas Ltd. is a utility company founded in 1994 in Alberta, Canada. AltaGas has more than 1,600 employees and over 570,000 customers in the United States and Canada. The utility owns five local natural gas distribution companies in Michigan, Alaska, Alberta, British Columbia, and Nova Scotia. Its renewable energy assets have a combined 1,700MW of capacity from hydro, gas-fired, wind and biomass, and 20MW of battery energy storage.
A: AltaGas is proposing to purchase WGL Holdings, Inc., the parent company of Washington Gas, the District’s natural gas local distribution company, for $4.5 billion in an all-cash transaction. The Public Service Commission of the District of Columbia (Commission or PSC) opened Formal Case No. 1142 to consider whether to approve these companies’ application to merge. Because Washington Gas also provides service in Maryland and Virginia, the merger is being considered by the Maryland Public Service Commission and the Virginia State Corporation Commission.

  • WGL and AltaGas have received all required approvals from federal agencies, including the Federal Energy Regulatory Commission, Federal Trade Commission, US Department of Justice, the Committee on Foreign Investment in the United States and the Virginia State Corporation Commission.

A: AltaGas is offering DC consumers approximately $17.15 million in financial commitments, including $12.25 million for one-time bill credits; $2 million for an affordable housing multifamily natural gas initiative; $2.2 million for low-income weatherization and energy efficiency programs; and $700,000 for workforce development initiatives.

The companies also propose an additional $24.5 million in financial commitments to benefit Washington Gas’s entire service area, including a $1.5 million contribution to the Washington Area Fuel Fund; $450,000 to study the development of renewable natural gas facilities; $2.75 million for a new damage prevention program; $12 million in charitable contributions over 10 years; and $7.8 million to develop 5 MW of grid energy storage or other renewable resources.

A: The Commission must determine whether WGL and Alta Gas’s application meets the legal standard for merger approval under DC laws. In order to meet the standard, the PSC must find that 1) the benefits to the merged companies do not cause harm to consumers, 2) consumers must receive direct and traceable benefits; and 3) the merger is in the public interest.
A: The Commission has established seven factors to determine whether the proposed merger is in the public interest. The Commission will consider the effects of the transaction on:

  • Ratepayers, shareholders, the financial health of the utilities standing alone and as merged, and the economy of the District;
  • Utility management and administrative operations;
  • Public safety and the safety and reliability of services;
  • Risks associated with all of the companies’ business operations;
  • The Commission’s ability to regulate the new utility effectively;
  • Competition in the local retail and wholesale markets that impacts the District and DC ratepayers; and
  • Conservation of natural resources and preservation of environmental quality.

A: OPC believes the PSC should reject the merger as proposed because it is not in the public interest and will not provide benefits to Washington Gas ratepayers that exceed its considerable costs. OPC has three main concerns and, in its role as a consumer advocate, argues that the merger (1) must not increase rates for consumers; (2) must not diminish local control and (3) must result in improvements in the safety and reliability of Washington Gas. WGL and Alta Gas’s merger application as filed with the PSC fails to alleviate OPC’s concerns. OPC’s PSC testimony highlights several problems with the proposed merger, including these significant issues:

  • The credit rating of Washington Gas will be downgraded, which could lead to higher rates for District residents.
  • The proposed merger could result in a negative impact to the District’s economy.
  • The proposed merger’s direct, quantifiable, traceable, and tangible benefits to ratepayers are very limited and almost entirely restricted to WGL and Alta Gas’s proposal to provide a one-time bill credit to District ratepayers of $12.25 million.
  • The proposed merger, if approved, will expose District ratepayers to new financial risks, such as risks associated with foreign currency exchange rates.
  • On safety and reliability, WGL and AltaGas have not made any explicit commitments to improve Washington Gas’s current pipeline replacement program, nor have they made any commitments to reduce hazardous leaks that are harmful to the environment.
  • WGL and AltaGas have not demonstrated that the proposed merger will result in positive environmental benefits that would enable Washington Gas to focus greater resources on the reduction of greenhouse gas emissions in the District.

A: The PSC is holding an evidentiary hearing in December 2017. The companies, OPC and other parties will file briefs in January 2018. The PSC is expected to make a final decision by April 2018.
A: The Commission held four community hearings in November to take public testimony. The public can submit written comments to the Commission until January 30, 2018 via the following ways:
A: Follow OPC on Twitter @DCOPC and Facebook @DCPeoplesCounsel.