Elizabethtown Gas, the utility once run by the Kean family, has a new parent company as part of another merger in the energy sector, a deal that will give its customers a one-time credit of $42 on their bills.
The state Board of Public Utilities yesterday approved Southern Co.’s acquisition of AGL Resources, the final remaining regulatory hurdle holding up the $12 billion deal. The merger is expected to close by tomorrow or shortly thereafter, according to the companies.
The acquisition creates the second-largest utility in the nation by adding AGL’s 4.5 million gas customers to about the same number of customers for Southern’s four electric utilities. Both companies are based in Atlanta.
With the energy industry undergoing dramatic changes, the deal reflects a trend toward larger, diversified energy companies comprising both unregulated and competitive power suppliers and regulated and more stable utilities. Earlier this year, Exelon, the nation’s largest operator of nuclear power plants, acquired Pepco Holdings, Inc, the owner of Atlantic City Electric.
For Elizabethtown, a company founded in 1855 and run by the Kean family for most of that time, the merger marks the second time it has changed hands since 2004. AGL acquired the utility back then after the gas company’s parent, NUI, ran into dire financial straits and trouble with state regulators. It eventually led to a corporate misconduct plea agreement with the New Jersey Attorney General’s office.
For Southern, an energy company heavily reliant on coal to power much of its generating capacity, the deal gives it a foothold in the rapidly growing natural-gas sector, which is becoming the fuel of choice to run new power plants. Historically low natural-gas prices are contributing to the shuttering of coal-fired plants, along with tougher environmental regulations to combat climate change.
Under the terms of a stipulation that paved the way for approval from the BPU, the new owner agreed to provide a direct rate credit to all its 285,000 customers, totaling $17.5 million dollars.
“The board is satisfied that this merger will provide many benefits to customers of Elizabethtown Gas, while protecting current employees and maintaining the current level of community support,’’ said BPU President Richard Mroz.
Along those lines, the Southern Company agreed to maintain a minimum of 300 employees in New Jersey to support the utility’s operations five years; honor existing contracts; and retain its operation centers, call centers, and headquarters for five years.
Both Mroz and fellow commissioner Joseph Fiordaliso made a point of noting the new parent is not based in New Jersey, a sometimes point of controversy between the agency and out-of-state owners.
“New Jersey sometimes is put on the back bench in consideration by the parent company,’’ Fiordaliso said, while acknowledging executives from Southern showed up for the meeting yesterday in the Statehouse annex.
As part of its approval, Elizabethtown also agreed to maintain its current level of community support contributions of $190,000 per year for a period of five years following the merger.
Southern announced the merger in August 2015.