20161019final_order_no_33628.pdf

Office of the Secretary
Service Date
October 19, 2016
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE MERGER
AGREEMENT BETWEEN QUESTAR GAS
COMPANY AND DOMINION RESOURCES
)
) CASE NO. QST-G-16-01
)
) ORDER NO. 33628 __________________ )
On March 3, 2016, Questar Gas Company and Dominion Resources, Inc. notified the
Idaho Public Utilities Commission (Commission) of a planned merger between the two
companies. The Companies filed the Application with the Utah Public Service Commission
(Utah PSC) as well as the Wyoming Public Service Commission. The Companies explained
they were notifying the Commission in furtherance of the Contract for Regulatory Services
between the Idaho Commission and Utah PSC. 1 In summary, the Companies stated that after the
merger, Questar will become a wholly owned subsidiary of Dominion (Dominion Questar).
Following negotiations with a group of interested parties, in August 2016, Idaho
Commission Staff signed onto a Settlement Stipulation in the Utah PSC case that recommended
the Utah PSC approve the merger. The Wyoming and Utah Commissions have approved
separate Settlement Stipulations, and the merger has occurred. With this Order, the Commission
recognizes the completion of the merger and issues instructions to Dominion Questar relating to
future proceedings.
BACKGROUND
Franklin County, Idaho, which lies on the Utah-Idaho border, is the only area within
the State served by Dominion Questar and affected by this merger. Because of Franklin
County's small population and geography, the number of Idaho customers served by the
Company is low. Consequently, this Commission found it "impracticable or not in the public
interest to conduct regulatory proceedings for affected Franklin County residents separate from
the proceedings conducted by the UPSC." Order No. 23282 at 5. Accordingly, in August 1990,
the Commission approved a "Contract for Regulatory Services" with the Utah PSC (pursuant to
Idaho Code § 61-505) agreeing that "the rates, charges and service regulations adopted by UPSC
for Mountain Fuel Supply Company [predecessor to Questar] in Utah shall be applied to
1 Because of this agreement, the Application was filed only in Utah. However, because the merger affects Idaho
customers, Staff participated in the process and the Commission monitored those proceedings.
ORDER NO. 33628 1
similarly situated customers served by Mountain Fuel Supply Company in Idaho.
Contract for Regulatory Services at 2.
" 1990
In April 2016, in anticipation of the underlying merger, this Commission updated its
contract with the Utah PSC. The current contract between the regulatory authorities states that
the Idaho Commission "has the power and authority pursuant to Idaho Code § 61-505(2) to
'contract with the regulatory agencies of neighboring states to ... set rates and charges for
customers in Idaho located in or near border communities served by utilities principally located
in' neighboring states." 2016 Contract at 1. Specifically, this Commission found that (1) the
continued provision of natural gas to Franklin County residents by Questar was in the public
interest; (2) it is impractical and not in the public interest to conduct separate proceedings from
the Utah PSC; (3) Questar's Idaho customers have full rights of participation in Utah PSC
proceedings; and (4) the rates, charges and services applicable to Questar's Idaho customers are
not less favorable than those of Questar's Utah customers.
The 2016 contract between the Utah PSC and Idaho Commission acknowledges the
planned merger between Questar Corporation and Dominion Resources, Inc. The Contract for
Regulatory Services is for a term of one (1) calendar year from April 1, 2016, "and shall be
renewed automatically for additional one (1) year terms," subject to the termination provision of
the contract. 2016 Contract at 2. The contract states that either party may provide written notice
of termination.
During the pendency of the merger Application in the Utah PSC, Idaho customers
served by Questar were notified of the proposed merger and corresponding Utah docket on
multiple occasions through press releases and direct communications-in February, March, and
May 2016. No comments were filed by any Idaho Questar customers. The regulatory services
contract with the Utah PSC also ensures that Idaho customers receive notice of Utah proceedings
so they are able to fully participate. Further, Idaho Commission Staff monitored the Utah PSC
proceedings and participated in settlement negotiations to represent Idaho customers' interests.
On August 15, 2016, interested parties and Idaho Commission Staff signed onto a Settlement
Stipulation to recommend approval of the merger agreement before the Utah PSC. No one
opposed the Settlement Stipulation.
ORDER NO. 33628 2
SETTLEMENT
The terms of the Settlement Stipulation include prov1s1ons relating to Company
management, employment matters, regulatory and financial terms, customer rates, allocation of
transaction-related costs, customer standards, and ring fencing provisions. The Stipulation also
includes provisions relating to the development of reporting requirements.
FINDINGS AND CONCLUSIONS
We have reviewed the record in this case, including the Dominion Questar
Application filed with the Utah PSC, the Settlement Stipulation offered by the parties in the Utah
proceeding and signed by Idaho Commission Staff, and the final Order of the Utah PSC.
Dominion Questar is a gas corporation and public utility subject to the Idaho Commission's
jurisdiction pursuant to Idaho Code§§ 61-117 and -129. The Contract for Regulatory Services
between the Utah PSC and the Idaho Commission allows rates, charges and service regulations
that are adopted by the Utah PSC to apply to Idaho's Dominion Questar customers as long as
certain parameters (protecting Idaho customers) are met. While it is in the public interest for this
Commission to allow the Utah PSC to oversee and determine these elements of the regulatory
process for the benefit of Idaho customers, we maintain all other authority granted to the Idaho
Commission by the Idaho Legislature through Title 61.
Based on our review, we agree with the Utah PSC that the evidence supports
Dominion has the necessary financial, managerial and technical qualifications to operate Questar
Gas; and that the merger of Dominion and Questar is just, reasonable and in the public interest.
We find that the Settlement Stipulation ensures continued safe and reliable operations, promises
increased customer satisfaction standards, and dictates additional ring fencing provisions that
provide sufficient safeguards for Idaho customers. Further, Dominion Questar has agreed not to
file a general rate case prior to July 1, 2019, or later than December 31, 2019 (unless otherwise
ordered by the Commission).
Consequently, we acknowledge the merger of Dominion and Questar. In order to
maintain appropriate regulatory oversight consistent with Title 61 and our regulatory services
agreement with the Utah PSC, we direct Dominion Questar to notify the Idaho Commission by
letter when it files notices, applications, requests, etc., with the Utah PSC. This will prevent
unnecessary duplication of dockets, but still allow the Idaho Commission to follow proposed
business decisions made by Dominion Questar that will impact Idaho utility customers.
ORDER NO. 33628 3
ORDER
Accordingly, IT IS HEREBY ORDERED that Dominion Questar notify the Idaho
Commission by letter when it files notices, applications, petitions, requests, etc., with the Utah
PSC.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of October 2016.
ERIC ANDERSON, COMMISSIONER
ATTEST:
O:QST-G-16-0!_bk2
ORDER NO. 33628 4