HomeMy Public PortalAboutExhibit MIEC 105G - Public Service Commission Order Approving Unanimous Stipulation and AgreementAttachment 6
In the Matter of the Joint Application of Southern
Union Company d/b/a Missouri Gas Energy,
The Laclede Group, Inc., and Laclede Gas
Company for an Order Authorizing the Sale,
Transfer, and Assignment of Certain Assets and
Liabilities from Southern Union Company to
Laclede Gas Company and, in Connection
Therewith, Certain other Related Transactions
STATE OF MISSOURI
PUBLIC SERVICE COMMISSION
At a session of the Public Service
Commission held at its office in
Jefferson City on the 17th day of
July, 2013.
File No. GM-2013-0254
ORDER APPROVING UNANIMOUS STIPULATION AND AGREEMENT
Issue Date: July 17, 2013 Effective Date: July 31, 2013
On July 2, 2013, Southern Union Company d/b/a Missouri Gas Energy, the Laclede
Group, Laclede Gas Company, the Staff of the Commission, the Office of the Public
Counsel, City of Kansas City, IBEW Local Union No. 53, Midwest Gas Users' Association,
and Missouri Department of Natural Resources filed a stipulation and agreement to resolve
all issues connected with the proposed sale of the Missouri Gas Energy natural gas system
to Laclede. Two parties - United Steelworkers District 11, AFL-CIO and Kansas City Power
& Light Company / KCP&L Greater Missouri Operations Company - did not initially join in
the stipulation and agreement. Subsequently, on July 9, United Steelworkers District 11
filed a notice indicating it was joining in the stipulation and agreement. Kansas City Power
& Light / KCP&L Greater Missouri Operations Company did not oppose the stipulation and
agreement within seven days of its filing and therefore, pursuant to Commission Rule 4
CSR 240.2.115(2), the Commission will treat the stipulation and agreement as unanimous.
The Commission conducted an on -the -record proceeding regarding the stipulation
and agreement on July 10, 2013. At that proceeding, the Commission questioned the
parties about the terms of the stipulation and agreement and gathered additional
information about the Transaction and the conditions set forth in the stipulation and
agreement.
The stipulation and agreement sets forth numerous conditions on the sale of the
Missouri Gas Energy assets to Laclede Gas Company. Among those agreed upon
conditions are a rate moratorium whereby Laclede Gas Company agrees not to file a
general rate case for its Laclede Gas service territory prior to October 1, 2015, unless there
is a significant unusual event that has a major impact on any of its Missouri service
territories. Laclede Gas Company will be allowed to file a general rate case for its Missouri
Gas Energy service territory no later than September 18, 2013. The stipulation and
agreement also provides that any acquisition premium paid for Missouri Gas Energy in
connection with the Transaction shall not be recovered in retail distribution rates. The
stipulation and agreement contains additional conditions designed to protect customers
from any adverse credit and capital cost impacts resulting from the Transaction; conditions
designed to protect the quality of service provided to customers; and numerous other
conditions that set out how the Transaction will occur and that will protect customers and
the public from any adverse impact from the Transaction.
The stipulation and agreement also asks the Commission to approve Laclede Gas
Company's plan to finance its purchase of the Missouri Gas Energy system from Southern
2
Union Company. In accordance with Section 393.200 RSMo, the Commission finds that
the money, property or labor to be procured or paid for by Laclede Gas Company through
the issuance and sale of debt and equity is reasonably required and necessary for the
purposes described in the stipulation and agreement and will be used therefore and that
such purposes are not in whole or in part reasonably chargeable to operating expenses or
to income.
After reviewing the stipulation and agreement, the Commission independently finds
and concludes that such stipulation and agreement is in the public interest and should be
approved.
THE COMMISSION ORDERS THAT:
1. The Stipulation and Agreement filed on July 2, 2013, is approved as a
resolution of the issues addressed in that stipulation and agreement. The signatory parties
are ordered to comply with the terms of the stipulation and agreement. A copy of the
stipulation and agreement is attached to this order, and is incorporated herein by reference.
2. Southern Union Company d/b/a Missouri Gas Energy and Laclede Gas
Company are authorized to perform in accordance with the terms of the Purchase and Sale
Agreement.
3. The sale, transfer, and assignment of certain assets of Southern Union
Company to Laclede Gas Company, as more fully described in the Purchase and Sale
Agreement, is authorized, with a closing date effective as of September 1, 2013, subject to
the provisions of the Purchase and Sale Agreement and Southern Union Company's
unilateral right to waive the condition of simultaneous closing of the transaction with
3
Laclede Gas Company and the sale of its New England Gas Company assets to Plaza
Massachusetts Corp.
4. Laclede Gas Company is granted a certificate of convenience and necessity
to provide natural gas service as a gas corporation and public utility, subject to the
jurisdiction of the Commission in the service areas presently served by Missouri Gas
Energy as a division of Southern Union Company. In connection therewith, the
requirements of Commission rule 4 CSR 240.3.205 are waived.
5. Laclede Gas Company is authorized to provide natural gas service in the
areas served by Missouri Gas Energy, as a division of Southern Union Company, in
accordance with the rules, regulations, rates and tariffs of Missouri Gas Energy as may be
on file with and approved by the Commission on the effective date of the closing of the
transaction, including the tariff sheets reflecting the existing base rates, ISRS rates, and
purchase gas adjustment of Missouri Gas Energy. Laclede Gas Company is authorized to
adopt said tariff sheets, and to operate under them as they may be changed from time to
time as provided by law.
6. Laclede Gas Company is authorized to adopt Southern Union Company's
authorized depreciation rates for the involved assets.
7. Laclede Gas Company is authorized to raise up to and including $1.02 billion,
at any time beginning July 31, 2013 and ending one year after the closing of the
Transaction, by issuing common or preferred stock, receiving paid -in capital, and issuing
long-term indebtedness, including debt evidenced by First Mortgage Bonds, by using the
Laclede Gas Company assets and the Missouri Gas Energy assets acquired from Southern
Union Company as security as may be necessary in connection with the financing of the
4
transaction contemplated by the Purchase and Sale Agreement and the Joint Application or
as may be necessary in accordance with the terms and conditions of any of Laclede Gas
Company's financing instruments and to execute, enter into, deliver and perform in
accordance with all necessary agreements, notes, and other documents as are necessary
to issue the debt.
8. Southern Union Company is authorized to transfer to Laclede Gas Company,
and Laclede Gas Company is authorized to acquire and record on its books and records
the current levels of certain assets and liabilities of Southern Union Company related to the
Missouri Gas Energy assets.
9. Laclede Gas Company is authorized to account for Missouri Gas Energy's
pension benefit costs on a basis consistent with Missouri Gas Energy's currently approved
methodology as established in Missouri Gas Energy File No. GR-2009-0355 stipulation and
agreement to use FAS 87 calculations for regulatory purposes that do not reflect the impact
of purchase accounting and that the prepaid pension asset receives similar treatment as
the prepaid asset under Missouri Gas Energy's approved methodology.
10. Laclede Gas Company is authorized to account for the MGE gas employees
and retirees post -retirement welfare benefit cost on a basis consistent with the
methodology used by Southern Union Company immediately prior to the sale. The
Commission finds that the FAS 106 calculations do not reflect the impact of purchase
accounting.
11. Southern Union Company, effective upon the closing of the transaction, is
authorized to terminate its responsibilities as a gas corporation in Missouri subject to the
jurisdiction of the Commission.
5
12. Southern Union Company and Laclede Gas Company are authorized to enter
into, execute and perform in accordance with the terms of all other documents which may
be reasonably necessary and incidental to the performance of the Transaction which is the
subject of the Purchase and Sale Agreement and the Joint Application,
13. The parties are granted such other relief as may be deemed necessary to
accomplish the purposes of the Purchase and Sale Agreement and the Joint Application,
as amended, and to consummate the sale, transfer and assignment of the assets and
related transactions pursuant to the Purchase and Sale Agreement.
14. Laclede Gas Company shall submit to the Commission within sixty (60) days
of closing the transaction a listing and description of all items that Laclede Gas Company
exercised under the authority in paragraph 13 above.
15. All prefiled testimony is admitted into the record.
16. This order shall become effective on July 31, 2013.
R. Kenney, Chm., Jarrett, Stoll, and
W. Kenney, CC., concur.
Woodruff, Chief Regulatory Law Judge
6
BY THE COMMISSION
Morris L. Woodruff
Secretary