Enbridge completes $4.3bn acquisition of natural gas utility Questar Gas from Dominion Energy

In a significant expansion of its natural gas distribution network, Enbridge Inc. has successfully completed the acquisition of Questar Gas Company and its affiliated cost-of-service gas supply company, Wexpro, from Dominion Energy for $4.3 billion. This transaction, part of a larger $14 billion deal involving two other natural gas utilities—East Ohio Gas and Public Service Company of North Carolina, Incorporated—marks a strategic enhancement of Enbridge’s operations in the United States.

Strategic Expansion in the Gas Utility Sector

Questar Gas, known for its extensive infrastructure spanning over 33,796 kilometers, serves nearly 1.2 million customer accounts across Utah, Wyoming, and Idaho. With this acquisition, Questar Gas will now operate as Enbridge Gas Utah, Enbridge Gas Wyoming, and Enbridge Gas Idaho, reflecting the new branding under Enbridge’s umbrella.

Wexpro, another key asset in this deal, continues to supply natural gas to Questar Gas under a cost-of-service agreement, ensuring a stable supply chain and reinforcing the utility’s operational capabilities. Michele Harradence, Enbridge’s Executive Vice President and President of Gas Distribution and Storage, emphasized the acquisition’s alignment with Enbridge’s low-risk utility business model, noting that it “enhances the scale and breadth” of their operations and supports stable, predictable cash flows.

A Broader Perspective on Enbridge’s Acquisitions

The acquisition of Questar Gas is a continuation of Enbridge’s strategy to strengthen its presence in the North American gas distribution market. Earlier in March 2024, Enbridge completed the $6.6 billion acquisition of East Ohio Gas, and it is poised to finalize the purchase of Public Service Company of North Carolina later this year, pending regulatory approvals.

These acquisitions are anticipated to contribute significantly to Enbridge’s earnings, with the combined inputs from Questar and East Ohio Gas expected to account for approximately 80% of the total annualized EBITDA from the three utilities involved in the deal with Dominion.

The consolidation of these utilities under Enbridge’s management is likely to offer enhanced efficiency and customer service by leveraging synergies across various operational areas. It also positions Enbridge as a formidable player in the North American energy market, capable of delivering comprehensive energy solutions across a broader geographic area.

This strategic move by Enbridge not only diversifies its asset base but also stabilizes its revenue streams, a crucial factor for sustaining growth and dividend payments in the unpredictable energy sector. Moreover, integrating these companies will likely lead to innovations in energy distribution and management, further solidifying Enbridge’s role in the transition towards more sustainable energy systems.