US: FTC imposes conditions on $37.7 Williams-ETE merger

Energy companies Energy Transfer Equity and The Williams Companies, Inc., will divest Williams’ interest in an interstate natural gas pipeline to settle Federal Trade Commission charges that ETE’s proposed acquisition of Williams would likely harm competition in Florida.

According to the FTC’s complaint, the proposed merger, initially valued at $37.7 billion, would have reduced competition in the market for “firm” – i.e., guaranteed – pipeline capacity to deliver natural gas to points within the Florida peninsula.

In Florida, natural gas is extensively used for electric power generation, making competitive access to constant and reliable sources of supply critical. Florida’s electric power utilities are the state’s largest purchasers of natural gas.

The state, however, has virtually no local sources of natural gas production and no natural gas storage, making utilities and other customers dependent on pipeline-transported supply. As the FTC’s complaint alleges, the combination of ETE and Williams, as proposed, likely would have increased the price of transporting natural gas to utilities and other customers.

According to the FTC’s complaint, Dallas-based ETE owns a 50 percent share in Florida Gas Transmission LLC one of two interstate pipelines that serve the Florida peninsula. Tulsa-based Williams owns 50 percent of the other interstate pipeline – Gulfstream Natural Gas System L.L.C.. Absent a remedy, the acquisition would eliminate the competition between FGT and Gulfstream, which historically has enabled Florida customers to obtain lower transportation rates and better terms of service. It also would have resulted in a pipeline monopoly at many natural gas delivery points within the peninsula.

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