Attorney General's News Release

May 29, 2003

Nixon files consent order to protect consumers, preserve competition in $1.8 billion natural gas pipeline acquisition

Jefferson City, Mo. — Attorney General Jay Nixon today took legal action to help protect natural gas consumers in seven western and central Missouri counties by preserving competition between the owners of two large natural gas pipelines that cross those counties.

Nixon filed a proposed consent order in federal court in Kansas City today that will impose conditions on a proposed $1.8 billion acquisition to keep control of both pipelines from being concentrated in the hands of two companies. Southern Union Co. (SU) and two affiliates of American International Group (AIG) Inc. had proposed acquiring the Panhandle Eastern Pipeline, which is owned by an affiliate of CMS Energy Corp. The other major pipeline, the Southern Star Central Pipeline, is owned by an AIG affiliate and managed by an SU affiliate.

"If this acquisition had gone through as originally proposed, control of the pipelines transporting more than 80 percent of the natural gas to parts of western Missouri would have been concentrated in the hands of Southern Union and AIG," Nixon said. "Consumers in the counties served by the pipelines would lose the price benefits gained through competition. By requiring the parties to relinquish some interests and agree to other conditions, we can ensure continued competition."

Nixon said the agreement will help natural gas customers in Cass, Henry, Jackson, Johnson, Lafayette, Pettis and Saline counties. The two pipelines run roughly parallel in those counties and are separated by only a few miles. The pipelines service local natural gas distribution networks, municipalities and other industrial users of natural gas.

If approved by the U.S. District Court for the Western District of Missouri, the consent order would prevent AIG from acquiring any ownership interest in the Panhandle Eastern Pipeline. The order also would require Southern Union to terminate its agreement with AIG to manage the Southern Star Central Pipeline before SU could acquire an ownership interest in the Panhandle Eastern Pipeline. CMS and SU also will pay the state of Missouri $90,000 to reimburse the state for the cost of the investigation.

The Missouri Attorney General's Office conducted its investigation of the proposed acquisition jointly with the Federal Trade Commission; the FTC today also announced it had entered a proposed consent order on the acquisition.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818