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The DC PSC Conditionally Approved the Joint Merger of AtlaGas Ltd and WGL Holdings in the Settlement Agreement Submitted in the District of Columbia

The MD PSC approved the Joint Merger Application of AtlaGas Ltd and WGL Holdings, Inc. on April 4, 2018.  In its decision, the Commission stated the merger is “consistent with the public interest, convenience and necessity; we have adequately mitigated any potential harms to consumers; and it benefits both Washington Gas customers and consumers generally”. As part of the merger approval, the Commission revised the conditions outlined in the settlement entered into by WGL, AltaGas, and Montgomery and Prince George’s Counties. After AOBA presented testimony and argued during hearings that non-residential customers were entitled to a rate credit, the PSC agreed and approved an $8.8 million rate credit for WG non-residential customers.

The State Corporation Commission of Virginia approved the WG acquisition on October 23, 2017. The process and legal standard for acquisition review is different in Virginia, unlike in Maryland and DC, formal evidentiary hearings are not required and were not held. There are no rate credits for any Washington Gas customers in Virginia.

In the District, AOBA, WG the Office of People’s Counsel and all parties entered into a Unanimous Settlement Agreement on May 8, 2018. As part of the Agreement, AltaGas agreed to fund $5,422,582 for one-time rate credits for WG non-residential customers in the District. The amount of each customer’s credit will be determined on a volumetric basis. The non-residential rate credits will be provided within 60 days after the merger closing and will be based on active customer accounts as of the billing cycle 30 days after the merger closing. Importantly, no portion of the rate credits will be recovered in utility rates.  WG’s last rate case was decided on March 3, 2017 and granted WG an $8,510,251 increase in rates. Of the $8.5 million approved, non-residential rates were increased by $2,738,000. Essentially, this rate credit offsets approximately two years of the rate increase granted in March, 2017.

Additionally, the Settlement Agreement provides for the AOBA Educational Foundation (AEF), beginning upon AEF’s qualification for 501(c)(3) status, to receive $250,000 per year for 7 years post-merger close. Further, the DC Attorney General and OPC have stated in a press release that “In a separate matter, Washington Gas has agreed that it will not seek recovery of any costs beyond a previously agreed upon cap of $28 million in connection with the replacement of obsolete infrastructure in the District. This infrastructure replacement is pursuant to a previous Public Service Commission order. The agreement ensures that ratepayers won’t be responsible for cost overruns associated with the project.” AOBA submitted testimony in support of the Settlement Agreement on May 25, 2018.

Finally, AtlaGas has agreed that WG will not file a new application requesting an increase in base rates in the District of Columbia until after January 3, 2020.

On June 28, 2018, the DC PSC conditionally approved the Joint Merger of AtlaGas Ltd and WGL Holdings set forth in the Settlement Agreement entered into by AltaGas, WGL Holdings, AOBA, the DC Government and the Office of People’s Counsel.  The terms of the conditions have not been specified at this time.