JEFFERSON CITY, Mo. (AP) - Missouri's two largest natural gas companies will become one under a deal approved Wednesday by state utility regulators that affects more than 1.1 million customers across the state.
The Missouri Public Service signed off on an agreement that will allow the state's largest gas supplier, Laclede Gas Co., to purchase the second largest supplier, Missouri Gas Energy, effective Sept. 1.
Utility commissioners approved the deal without dissent, stating in a written order that it "is in the public interest."
Laclede Gas serves about 630,000 customers in St. Louis and 10 eastern Missouri counties. Missouri Gas Energy serves about 500,000 customers in about 30 western and central Missouri counties, including the Kansas City, St. Joseph and Joplin areas.
St. Louis-based Laclede Gas had announced last December that it would pay about $1 billion - and assume about $20 million of debt - to acquire Missouri Gas Energy and New England Gas Co., which are subsidiaries of Houston-based Southern Union Co.
Approval by the Missouri Public Service Commission means Laclede can proceed with its financing, the company said.
"We are excited to reach this critical milestone and be able to close on this transformative transaction over the next several weeks," Suzanne Sitherwood, president and CEO of The Laclede Group Inc., said in a written statement Wednesday.
The Laclede Group is the parent company of Laclede Gas.
The agreement approved by Missouri utility regulators bars Laclede Gas from seeking a general rate increase in its current service area until October 2015, unless a natural disaster, terrorist attack or significant change in the financial markets, tax laws or government regulations causes the newly combined company to lose at least $5 million of net income.
It could seek an immediate rate increase for customers in the Missouri Gas Energy territory but then could not do so again until October 2015, unless its finances are affected by any of those major events.
The state agreement calls for Missouri Gas Energy to be operated as a division of Laclede Gas. It bars the companies from trying to pass on transaction costs or acquisition premiums to ratepayers but does allow for the future recovery of some one-time costs associated with integrating the two companies.
The current energy efficiencies programs operated by both companies are to continue.
Another part of the state agreement requires Laclede Gas to account for the costs of a deadly gas line explosion that occurred Feb. 19 in Kansas City in a way that insulates the rates of current Laclede Gas customers. But Laclede Gas could still seek to recover costs associated with the incident from customers in Missouri Gas Energy's current territory.
Public Service Commission: http://psc.mo.gov/
Laclede Gas: http://www.lacledegas.com/
Missouri Gas Energy: https://www.missourigasenergy.com/MGE/