OPC Urges Rejection of Proposed Gas Company Merger

 

Washington, D.C. – In testimony filed today in the proposed merger of WGL Holdings and AltaGas, the Office of the People’s Counsel cited several serious deficiencies in the companies’ application and People’s Counsel Sandra Mattavous-Frye urged the Public Service Commission to reject the merger application. OPC’s analysis of the proposal submitted by the utilities, concludes that the merger would not be in the public interest and will not provide benefits to ratepayers that exceed the considerable costs that will result, the People’s Counsel said.

“OPC will be reaching out to educate consumers about this important case and lay out the evidence why the ratepayers may suffer harm if the merger is approved.”

In April, WGL--the parent company of Washington Gas--and AltaGas, a Canadian utility, filed an application with the PSC seeking permission to allow AltaGas to acquire WGL in an all-cash transaction worth about $4.5 billion. OPC’s team of legal and technical experts has closely scrutinized the companies’ application to determine whether it meets the Commission’s legal standard for mergers. Specifically, OPC has focused on whether the proposed merger will provide Washington Gas customers with tangible benefits, not harm them, and otherwise will be in the public interest.

OPC’s testimony demonstrates that the proposed merger could result in the credit rating of Washington Gas being downgraded, which could lead to higher rates for consumers. OPC believes the direct economic benefits to ratepayers would be very limited and almost entirely restricted to WGL and AltaGas’s proposal to provide a one-time bill credit to District ratepayers totaling $12.25 million.  

“We urge the Commission to recognize that increased rates for customers will mean reduced household and business disposable income, and therefore, will have a negative impact on the city’s economy,” said Mattavous-Frye.

OPC also identifies and takes issue with the lack of adequate commitments by the companies in their application that would help improve the safety and reliability of Washington Gas’s distribution system. For example, the utilities have only committed to maintaining planned construction investments through PROJECTpipes, its current infrastructure replacement program; and no further infrastructure improvements are cited in the application. In addition, the companies have not committed to providing measurable reductions in hazardous leaks in its distribution system that can emit greenhouse gas emissions, which are harmful to the environment.

The PSC will hold evidentiary hearings on the application—designated as Formal Case No. 1142--in December of this year. A final decision is expected by April 2018.