Dominion Spins Off Marcellus Gathering System into New Company

spin offDominion is a huge utility/pipeline company operating in 13 states and organized into multiple corporations–but all under the broad umbrella known as Dominion. One of the pieces of the company is called Dominion Transmission, Inc. (DTI)–the interstate and gathering pipeline segment of the company, headquartered in Richmond, VA. Dominion has just announced they will strip out the gathering pipeline bits of the business from DTI and put them into a new company (on paper) called Dominion Gathering & Processing, Inc. It also appears that DTI itself will be renamed to Dominion Resources, Inc. The value of the transaction (what Dominion will essentially pay itself) is $434 million for the gathering assets. Why all of the musical chairs and setting up new corporations on paper? This time it doesn’t appear to be about tax advantages, as it so often is. Dominion is making the change because gathering systems are not regulated under FERC (Federal Energy Regulatory Commission) rules the way interstate pipelines are. By unbundling the gathering pipelines/compressor plants/etc. from the company that operates the interstate pipeline, Dominion can better compete with others in the midstream space. That is, right now because the gathering assets are part of the same company as the interstate pipeline, those assets are subject to FERC regulatory hoops and nonsense–so Dominion is removing those assets from that nonsense–sort of untying their hands to be on a level playing field with others…

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