Enbridge Inc.’s agreement to acquire three natural gas utilities from Dominion Energy for $14 billion presents opportunities for smaller companies in the sector.
The Canadian pipeline giant will dramatically expand its regulated gas distribution business in the U.S. through the purchase of Questar Gas, East Ohio Gas and Public Service Company of North Carolina.
But the deal also creates an opening for nimble smaller utilities to grow amidst consolidation. Regulators may require certain assets to be divested as conditions for merger approval.
Smaller players could potentially gain customers, infrastructure and new geographies by acquiring these divested assets. Companies in the energy sector may be well positioned.
The agreement comes as Dominion reviews its business mix. Other major utilities are also rationalizing assets, setting the stage for smaller competitors.
Small operators boast strong community ties and localized expertise. They have advantages in customer service and responsiveness.
While lacking scale, these firms can thrive by focusing resources on targeted markets and infrastructure modernization. Many also offer renewable natural gas and other next-gen offerings.