By Wendy Stueck, Globe and Mail Update CTV2 (Full article)
VANCOUVER — A British Columbia natural gas utility swallowed by a Texas pipeline company in 2005 is headed back into Canadian hands, courtesy of a $1.4-billion deal struck between Fortis Inc. and U.S. energy giant Kinder Morgan Inc. Fortis, an electric utility holding company based in St. John's, has agreed to buy the natural gas distribution business of Terasen Inc. from Houston's Kinder Morgan. The Texas company owns a massive pipeline network, gasoline and coal terminals and other assets that have a collective value of about $35-billion (U.S.). Kinder Morgan bought Terasen, formerly BC Gas Inc., in 2005. Terasen, based in Vancouver, has operated two lines of business: natural gas distribution and pipelines. Monday's transaction does not include the pipeline assets, which Kinder Morgan will keep.
The deal makes sense, analysts said, because Kinder had coveted Terasen for its pipeline network, not its retail distribution. “It's completely to be expected, because [the natural gas distribution] never made sense in the Kinder Morgan business model,” said B.C. lawyer and energy critic David Austin. “They didn't want to be in a utility business where your returns are regulated by the B.C. Utilities Commission, which says ‘you can make this much and not a penny more.' “ Fortis, which has stakes in regulated electricity utilities as well as generation assets, said the deal brings a new business segment under the company's umbrella, more than doubles its regulated rate base to about $6-billion (Canadian) and gives it a bigger footprint in the fast-growing economies of B.C. and Alberta.
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