Sempra Energy unit to surrender Nova Scotia natural gas distribution franchise

By Sylvie Dale
Online Editor

SAN DIEGO, Calif. Sept. 24, 2001 — Sempra Energy’s Sempra Atlantic Gas unit has notified the Government of Nova Scotia and the Nova Scotia Utility and Review Board (UARB) that the company intends to surrender its natural gas distribution franchise.

The decision comes after a more than $35 million investment and months of construction delays. Company officials said they did not know whether, under the current regulatory environment, a viable business case can be made for moving forward in Nova Scotia.

Consulting company Sask Energy expressed surprise Monday at Sempra Atlantic’s decision, saying that the two companies had met just last week about bidding together on the distribution rights, reported the Halifax Daily News (

Sask Energy president Ron Clark has said the company may bid on its own, but must first reevaluate its position in light of the changes brought on by Sempra Atlantic.

In June 2001, Sempra Atlantic Gas advised the UARB that, since receiving the franchise, actions beyond the control of the company have had a substantial negative impact on the company’s proposed plans. Under the terms and conditions of the franchise agreement, this entitles the company to surrender its franchise.

Sempra Atlantic Gas was awarded the natural gas distribution franchise in December 1999. After two years of continued construction delays, the company said it now has no option but to take this action.

Sempra Energy’s investment in the natural gas distribution project to date is approximately $35 million. The company expects to recover a portion of the investment. Even with a third-quarter charge for costs not expected to be recovered, Sempra Energy continues to project earnings per share for 2001 of approximately $2.50.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with annualized 2001 revenues of about $11 billion. Through its eight principal subsidiaries — Southern California Gas Company, San Diego Gas & Electric, Sempra Energy Solutions, Sempra Energy Trading, Sempra Energy International, Sempra Energy Resources, Sempra Communications and Sempra Energy Financial — the Sempra Energy companies’ 12,000 employees serve more than 9 million customers in the United States, Europe, Canada, Mexico, South America and Asia.

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