Elizabethtown Gas to Go to Southern as Part of $12B AGL Acquisition

Tom Johnson | October 19, 2015 | Energy & Environment
If BPU approves Elizabethtown deal, Southern would become second-largest utility in United States

elizabethtown gas
AGL Resources, the owner of Elizabethtown Gas, filed a request Friday with New Jersey regulators seeking approval for its merger with the Southern Company — the latest change of hands of a utility in the state, if approved.

In acquiring AGL in a $12 billion cash-and-debt deal, Southern would become the second-largest utility in the United States, adding 4.5 million utility-gas customers to its revenue base.

Southern, which like AGL is based in Atlanta, owns electric utilities in Georgia, Alabama, Florida, and Mississippi that serve 4.5 million customers. It also is a growing force in the competitive energy market whose power plants generate 46,000 megawatts of capacity.

About 40 percent of the company’s generating capacity comes from coal-fired units, which face increasingly tough mandates to reduce emissions, which leading to the closure of many facilities across the country. That trend also is being driven by historically low prices for natural gas, which is much cleaner than coal.

[related]For Elizabethtown Gas, the approval of the deal would mark the second time since 2004 that the utility, which serves 279,000 customers in central Jersey, has been acquired. AGL bought the company from New Jersey-based NUI after the latter ran into deep financial problems and trouble with state regulators.

With rapid changes roiling the sector, the trend toward larger, more diversified energy companies has been evident in New Jersey. Earlier this year, the state Board of Public Utilities approved the acquisition of Atlantic City Electric and its parent Pepco Holdings Inc. by Chicago-based Exelon. That deal, however, still needs approval from regulators in the District of Columbia.

By adding AGL, the largest natural-gas-only distributor in the country, Southern will establish a major footprint in the gas sector at a time when it is booming.

“These assets are very attractive right now,’’ said Paul Patterson, an energy analyst at Glenrock Associates in New York City.

Besides its utility customers, AGL has a retail gas business, operates some gas storage facilities, and is developing additional gas pipelines. The companies hope to complete the transaction in the second half of 2016.