Exhibit C-2
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
AT RICHMOND, JULY 28, 2000
JOINT PETITION OF
DOMINION RESOURCES, INC.,
CONSOLIDATED NATURAL GAS COMPANY,
and
AGL RESOURCES INC. CASE NO. PUA000054
For approval of a stock
purchase agreement under
Chapter 5 of Title 56 of
the Code of Virginia
FINAL ORDER
On June 22, 2000, Dominion Resources, Inc. ("DRI"), Consolidated Natural
Gas Company ("CNG"), and AGL Resources Inc. ("AGLR") (collectively,
"Petitioners") filed their Joint Petition seeking approval under Chapter 5 of
Title 56 of the Code of Virginia of a stock purchase agreement whereby Virginia
Natural Gas, Inc., ("VNG") would become a wholly owned subsidiary of AGLR.
Petitioners have also requested that the Commission issue a letter
certifying to the Securities and Exchange Commission ("SEC") that the Commission
has the resources to, and does currently exercise, regulatory jurisdiction over
the rates, services, and operation of VNG and that it will continue to exercise
that jurisdiction following the acquisition.
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AGLR is a Georgia corporation operating as holding company for Atlanta Gas
Light Company and its wholly owned subsidiary, Chattanooga Gas Company, as well
as a number of non-utility subsidiaries and joint ventures. Under the terms of
Petitioners' agreement, CNG will sell, convey, transfer, assign and deliver to
AGLR all of the issued and outstanding shares of capital stock of VNG for $550
million, payable in cash at closing, subject to certain modifications described
in the Joint Petition. As a result of the transaction, VNG's common stock will
not be changed, but it will be owned directly or indirectly by AGLR. AGLR will
remained headquartered in Atlanta, Georgia, while VNG's headquarters will remain
in Norfolk.
The transaction, with its financing activities and intrasystem service
arrangements, will also require the approval of the SEC under the terms of the
Public Utility Holding Company Act of 1935 ("1935 Act"). Upon consummation of
the transaction, AGLR will register with the SEC as a holding company under ss.
5 of the 1935 Act. Approval of the transaction must also come from the Federal
Trade Commission ("FTC"). Our order of January 28, 2000, in Case No. PUA990020,
approving the merger of CNG and DRI, conditioned that approval upon the
subsequent divestiture or spin-off of VNG. The FTC imposed a similar condition
in its Decision and Order in approving that merger. The instant application is
in satisfaction of these conditions.
On June 27, 2000, the Commission entered its Order for Notice and Comment
in this matter, directing parties interested in commenting on the proposed
transaction to file such comments
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or requests for hearing on or before July 19, 2000. None were received. On July
19, 2000, Petitioners filed the affidavits of VNG's Manager of Communications
and General Manager of Operations and Customer Service attesting that the notice
and service directed in the Order for Notice and Comment had been timely
accomplished.
On July 20, 2000, the Staff of the State Corporation Commission ("Staff"),
the Petitioners, and VNG entered into a Joint Agreement to resolve the issues
raised by the Joint Petition and filed a Motion for Consideration of Joint
Agreement. The Staff and the parties represented that, if adopted by the
Commission, the Joint Agreement would result in a fair, reasonable and efficient
resolution of the proceeding, assure that the statutory standard set out in
ss.56-90 of the Code of Virginia is met, and otherwise protect the public
interest.
The principal components of the Joint Agreement include:
1. VNG has forecasted that it intends to make plant and capital
expenditures of $143.6 million during the period 2000-2004 to extend its
facilities to new customers and to maintain and improve the level of service to
existing customers. AGLR and VNG represent that service quality will not
deteriorate in VNG's service territory as a result of the acquisition. VNG will
report annually on its capital expenditures for the preceding year and explain
any deviation from planned investment, demonstrating that service quality has
not been adversely affected thereby.
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2. AGLR and VNG's representation that quality of service will not
deteriorate due to any material reduction in the number of employees providing
services.
3. AGLR and VNG's representation that the acquisition will not materially
impact the cost of capitalization used for ratemaking for VNG. AGLR and VNG
agree that if such adverse impact occurs, they shall not seek to recover any
resulting cost of capital increases from VNG customers.
4. AGLR and VNG's representation that the acquisition will not affect the
Commission's regulatory authority with regard to VNG, and their pledge to
continue to maintain a high degree of cooperation with the Staff and to take all
actions necessary to ensure VNG's timely response to Staff inquiries with regard
to their provision of service in Virginia.
The Staff filed the Report of its investigation of the application on July
24, 2000. The Report recommended approval of the proposed acquisition subject to
the terms of the Joint Agreement. Further, Staff recommended that any order
authorizing the acquisition make clear that such authorization does not extend
to any subsequent affiliate financing or service arrangements that will require
separate applications under Chapters 3 or 4 of Title 56 of the Code of Virginia.
In short, Staff concluded that with the conditions set out in the Joint
Agreement and as supplemented in the Report, adequate service to the public at
just and reasonable rates would not be jeopardized by our approval of the Joint
Petition.
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NOW THE COMMISSION, having considered the Joint Petition. the Staff Report,
and the proposed Joint Agreement, is of the opinion and finds that the Joint
Agreement should be approved without modification. We find, consistent with the
requirements of ss. 56-90 of the Code of Virginia, that the provisions of Joint
Agreement will ensure that adequate service to the public at just and reasonable
rates will not be impaired or jeopardized. We further find, based on the record
in this proceeding, that following the acquisition we will continue to have, and
will exercise, regulatory jurisdiction over the rates, services, and operation
of VNG. With respect to the Petitioners' request that we provide a certification
letter to the SEC, we direct the Staff to prepare and file an appropriate
response with the proper officials at the SEC upon their request for the same.
Accordingly, IT IS ORDERED THAT:
(1) The Motion for Consideration of Joint Agreement is granted.
(2) The Joint Petition is hereby approved subject to the terms and
conditions of the Joint Agreement.
(3) The Joint Agreement is adopted in full herein and the Petitioners and
VNG are ORDERED to comply with its terms and with the conditions established
therein.
(4) Except to the extent set out in the Joint Agreement adopted above, this
Order shall have no ratemaking implications.
(5) The authorizations approved herein do not extend to any subsequent
affiliate financing or service arrangements that will
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require separate applications under Chapters 3 or 4 of Title 56 of the Code of
Virginia.
(6) There being nothing further to be done in this matter, it is hereby
dismissed.
AN ATTESTED COPY HEREOF shall be sent by the Clerk of the Commission to:
Stephen H. Watts, II, Esquire, Dominion Resources, Inc., One James Center, 901
East Cary Street, Richmond, Virginia 23219-4030; Edward L. Flippen, Esquire,
Kodwo Ghartey-Tagoe, Esquire, and David K. Dewey, Esquire, McGuire, Woods,
Battle & Boothe, L.L.P., 1 James Center, 901 East Cary Street, Richmond,
Virginia 23219-4030; James F. Stutts, Esquire, Dominion Resources, Inc., 120
Tredgar Street, Richmond, Virginia 23219; J. Alan Crittenden, Esquire, Dominion
Resources, Inc., 615 Liberty Avenue, CNG Tower, Pittsburg, Pennsylvania
15222-3199; Donald A. Fickenscher, Esquire, Virginia Natural Gas, Inc., 5100
East Virginia Beach Boulevard, Norfolk, Virginia 23502-3488; Paul R. Shlanta,
Esquire, AGL Resources Inc., 817 Peachtree Street, N.E., Suite 1000, Atlanta
Georgia 30308; John F. Dudley, Senior Assistant Attorney General, Division of
Consumer Counsel, Office of Attorney General, 900 East Main Street, Second
Floor, Richmond, Virginia 23219; and the Commission's Divisions of Economics and
Finance, Energy Regulation, and Public Utility Accounting.
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