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SALT LAKE CITY — The state's largest natural gas supplier has agreed in principal to be acquired by a mid-Atlantic energy corporation.
Questar Corp. announced Monday that the utility would be purchased by Dominion Resources Inc., which is based in Richmond, Virginia. The combined company would serve about 2.5 million electric customers and 2.3 million natural gas customers in seven states.
Dominion has agreed to pay Questar shareholders approximately $4.4 billion — $25 per share — and assume the company's outstanding debt, according to a statement. The deal still requires approval by Questar shareholders and also has to clear a number of regulatory hurdles before becoming final, which is expected to happen by year's end, said Dominion spokesman Ryan Frazier.
Questar currently serves almost 1 million homes and businesses in Utah, Wyoming and Idaho, while Dominion — one of the nation's largest energy companies — provides electric and natural gas service throughout the mid-Atlantic region.
Other terms of the agreement include maintaining Questar Gas' corporate headquarters in Salt Lake City and establishing Dominion's Western region headquarters in Utah's capital as well, he said. Upon finalization of the transaction, the new utility would be named Dominion Questar Gas.
Frazier said Questar employees would be given due and fair consideration for continued employment and promotion within the new organization.
The new company would also substantially increase Questar's current community philanthropy and establish an advisory board comprised of local community and business leaders to provide feedback on community issues, he added.
As for local customers, company leaders said they should see little change in their service as a result of the acquisition.
"Our customers will continue to enjoy the same safe, reliable and low-cost services provided by the same high-performing Questar people who make our company great," said Ron Jibson, Questar chairman, president and CEO. "Our similar cultures and commitment to customers, employees, communities and shareholders make this a win-win transaction."
Jibson will continue as Questar chairman, president and CEO through the closing of the transaction.
"Like Dominion, Questar has a history of safe and reliable operations, integrity and a firm commitment to its employees and the communities it serves," said Thomas Farrell II, chairman, president and CEO of Dominion. "Questar's customers can count on a continuation of the high-quality service they have enjoyed for years."
Apart from this transaction, Dominion has already invested or is currently investing about $1 billion in three solar generating facilities located in Beaver, Iron and Millard counties in Utah, Frazier explained. The solar facilities are supported by long-term power purchase agreements with local electric utilities, he said.
Meanwhile, the effect of the proposed transaction are not expected to change much for the average local natural gas consumer, according to one local analyst.
"I don't see an impact in the short to medium term on Questar's customers," said Jay Barney, professor of strategic management at the University of Utah. "On the margins, there may be some small impacts, but in terms of (natural gas production) or service, there may be very modest changes."
