Current Choice Program To Be "Evaluated" Under Utility’s Acquisition by Utility Without Choice
July 15,2015
Black Hills Corp. has entered into a definitive agreement to acquire SourceGas Holdings LLC from investment funds managed by Alinda Capital Partners and GE Energy Financial Services for total consideration of $1.89 billion
SourceGas operates natural gas customer choice programs in Wyoming and Nebraska. Its choice territories include about 170,000 customers.
The Casper Star Tribune paraphrases a Black Hills spokesperson as stating that Choice Gas will continue in the short-term, but will be one of the programs evaluated as part of the merger
According to a company-posted transcript of an investor call regarding the acquisition, a Black Hills executive, when asked about the potential for rate-basing gas reserves, cited the choice program and stated:
"SourceGas has what they call a choice gas program which provides essentially for supply alternatives for customers, really almost like a short term duration lock on prices, but the gas can potentially come from either SourceGas or a third-party provider. So when we look at integrating a cost of service gas program with SourceGas, we obviously have to work through the differences in the programs. One is very short-term in nature for customers. The cost of service gas program is very long-term in nature. So when we look at integrating a cost of service gas program with SourceGas, we obviously have to work through the differences in the programs. One is very short-term in nature for customers. The cost of service gas program is very long-term in nature. So we will have to resolve the differences going through the utility commission approval process could. We don't view that as particularly complicated. It just may take a little more time in their territories than it will in ours, which we've stated our intent to try to file for approval in our territories yet this fall."
"Now from a size perspective ... we are looking at a long-term objective of providing about 50% of our gas from cost of service gas. For us that runs a little less than 40 billion cubic feet a year. The volume for SourceGas would be very similar to that, maybe slightly less, if we provided 50% for their territories as well."