CORP / Westcoast Responds to Decision by Ontario Energy Board
Decision on Separation of Retail Energy Services Business
TSE, ME, VSE SYMBOL: W
NYSE SYMBOL: WE
JUNE 1, 1998
VANCOUVER, BRITISH COLUMBIA--The Ontario Energy Board (OEB) has
granted approval for Westcoast Energy's wholly-owned subsidiary
Union Gas to transfer its existing merchandise related programs to
Union Energy. Union Energy is an unregulated affiliate of Union
Gas. The programs to be transferred include appliance sales and
rentals, appliance service work and merchandise financing.
"We are pleased with the decision," said Michael Phelps, Chairman
and CEO of Westcoast Energy Inc. "We are moving quickly to take
full advantage of the opportunities arising in the rapidly
deregulating energy services market. These programs, combined
with Union Energy's recent purchase of nine leading heating,
ventilation and air conditioning companies in Ontario and
Manitoba, demonstrate our commitment to being the market leader in
household and industry retail energy services."
Westcoast expects the transaction will be complete by year end.
As a result of the transaction, Union Energy will have assets of
approximately $500 million and revenues of approximately $180
million.
Westcoast Energy Inc., (TSE:W; NYSE:WE) headquartered in
Vancouver, British Columbia, has assets of approximately $10
billion. The company's interests include natural gas gathering
and processing facilities, gas transportation and storage
facilities, gas distribution companies as well as power
generation, international and energy services businesses.
UNION GAS RECEIVES APPROVAL FROM ONTARIO ENERGY BOARD FOR
MERCHANDISE PROGRAM TRANSFER
CHATHAM, ONTARIO--Union Gas Limited has received approval from the
Ontario Energy Board to transfer its merchandise programs to an
unregulated affiliate Union Energy. The transfer will result in
$12 million in annual delivery cost savings for Union Gas
customers across Ontario. Natural gas ratepayers will not bear
any of the costs of the transfer.
The Ontario Energy Board released its decision on Friday, May
29th. The Board found the plan to transfer the merchandise
programs is in keeping with the deregulation of the energy
industry in Ontario and granted prior approval for the transfer
subject to certain conditions. The transfer is expected to take
place on December 31, 1998.
The programs to be transferred include water heater and other
appliance rentals and appliance sales, repair and financing.
Prices for these programs will continue to be subject to
competition in the marketplace.
"There will be substantial benefits for our customers with this
change, including $12 million of savings annually for our delivery
customers," said Union Gas President and Chief Executive Officer
Bob Reid. "In addition to the cost savings, offering the finance
and merchandise programs outside of the regulated utility will
mean greater value and choice for customers. We will ensure a
smooth transition for our customers".
When complete, the transaction will involve the transfer of
approximately $475 million in assets and approximately 500 jobs to
Union Energy.
Union Gas is a major gas utility which provides energy delivery
and related services to more than one million residential,
commercial and industrial customers in over 400 communities in
northern, eastern and southwestern Ontario. Union Gas also
provides storage and transportation services for other utilities
and energy market participants in Ontario, Quebec and the United
States. Union Gas is a member of the Westcoast Energy group of
companies headquartered in Vancouver.
/T/
Michael Bermon
Senior Vice President
Finance and Regulatory Affairs
(519) 436-4530 or
(416) 496-5206
Elizabeth Havelock
Manager, Corporate Communications
(519) 436-4520
/T/
Union Gas / Union Energy Transaction Approval
Media Backgrounder
- In July 1997, Westcoast Energy announced the formation of Union
Energy to provide competitive energy services and products to
commercial and residential customers. Union Energy is not
regulated by the Ontario Energy Board (OEB).
- In October 1997, Westcoast Energy Inc. and Union Gas Limited
applied to the OEB for prior approval of the transfer of Union's
merchandise programs to Union Energy.
- The programs, including appliance sales and rentals (such as
water heaters), appliance service work and merchandise financing
are valued at approximately $475 million and are offered to
approximately 1 million customers in Southwestern, Eastern and
Northern Ontario.
- The restructuring will require the transfer of about 500
employee positions to Union Energy and will involve relocations
and retraining.
- A public hearing on the application took place in February and
March 1998.
- On May 29, 1998, the Ontario Energy Board granted prior
approval for the transaction which is expected to occur on
December 31, 1998.
- The approval allows for $12 million in annual savings to Union
Gas' customers starting in January 1999. Natural gas ratepayers
will not bear any of the transition costs.
- Union Gas Limited is regulated by the OEB and will continue to
focus on providing safe, reliable and efficient delivery of
natural gas.
- Union Gas Limited and Union Energy Inc. are wholly-owned
subsidiaries of Vancouver-based Westcoast Energy Inc.
June 1, 1998
|
