The N.C. Utilities Commission last week granted permission for the full merger of a gas startup into its partial owner, Piedmont Natural Gas Corp.

Eastern North Carolina Natural Gas, which serves 14 counties in the northeastern part of the state that were previously without service, received $188.3 million of $200 million in gas bond funds that voters approved in 1998. Co-owned by Piedmont and a nonprofit economic development group, ENCNG has used the public funding to construct more than 600 miles of pipeline infrastructure. However, ENCNG is unable to continue as a separate entity because it does not have a sufficient number of customers to sustain operations.

The merger is part of a plan for ENCNG customers to become Piedmont customers, who would then pay the same rates statewide. But the Utilities Commission must first approve a rate increase requested by Piedmont, which wants permission to collect an additional $36.7 million annually from its customers after the merger.

Piedmont has suggested that if the rate increase isn’t granted, it could walk away from the ENCNG project altogether.

The Utilities Commission said Wednesday that it “will approve the acquisition and merger on grounds that the expected overall benefits will outweigh the expected overall costs, harms, and risks and that the acquisition and merger are consistent with the public interest….”

But the commission stipulated that the “precise structure and specifics” of the merger would have to be addressed in the separate proceedings that will consider the rate increase. If allowed, Piedmont’s residential customers will see their average annual bills increase by $9. That could change, as members of Piedmont, the state Department of Justice, and the Utilities Commission Public Staff (which represents consumers) are expected to meet this week to try to negotiate a settlement.

North Carolina industry customers, represented by the Carolina Utility Customers Association, have opposed the merger and rate increase. They are expected to participate in the settlement negotiations also.

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].