Dominion Energy, Warren Buffett's Berkshire Hathway Energy terminate Questar Pipeline sale

Dominion is looking to sell Questar Pipelines to an alternate buyer by the end of 2021

Dominion Energy and Warren Buffett's Berkshire Hathaway Energy have agreed to terminate a planned sale of Questar Pipelines.

Ticker Security Last Change Change %
BRK.A BERKSHIRE HATHAWAY, INC. 420,791.40 +2,690.40 +0.64%
D DOMINION ENERGY, INC. 73.77 -0.76 -1.02%

Dominion cited "ongoing uncertainty associated with achieving clearance from the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976" as the reason for the termination.  A representative for Berkshire Hathaway Energy declined to comment further.

The FTC Bureau of Competition's acting Director Holly Vedova said in a statement Tuesday that the agency "collected extensive testimonial, documentary, and economic evidence" demonstrating that the acquisition would have "eliminated the close competition" between Berkshire Energy's Kern River Gas Transmission Pipeline and Questar, which has "benefited customers who sought large transportation contracts or direct connections between their facilities and the interstate pipeline" and "enabled Utah customers to obtain lower transportation rates and better terms of service." 

The FTC previously filed a lawsuit to block the same combination back in 1995, when Questar attempted to purchase a 50% share in Kern River Pipeline.

"Although this outcome preserves competition, it is disappointing that the FTC had to expend significant resources to review this transaction," Vedova added. "Given our prior action, and the even closer competition that developed between the pipelines since then, this is representative of the type of transaction that should not make it out of the boardroom. The Bureau of Competition will be actively exploring its options on how to curtail this type of re-review to better deploy the Commission’s scarce resources." 

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Dominion said Monday's announcement has no impact on the sale of gas transmission and storage assets to Berkshire Hathaway Energy.

Berkshire entered into an agreement last year to purchase Dominion's natural gas transmission and storage network for $4 billion, including more than 7,700 miles of natural gas transmission lines and 900 billion cubic feet of gas storage, according to Reuters

The asset sale, which represents approximately 80% of the original transaction value for Questar Pipelines, was completed in November 2020.

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Additionally, the terminated sale will not change Dominion's existing financial guidance, the company said, noting it will "continue to account for Questar Pipelines as discontinued operations."

 The company intends to enter into a 364-day term loan, which will be used to repay Berkshire for its approximately $1.3 billion transaction deposit. The loan is expected to be repaid from the proceeds of a Questar Pipelines sale to an alternative buyer. 

Dominion noted it is "commencing a competitive process for the sale of Questar Pipelines," with a target close by the end of 2021.