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Energy West acquires Elkin-based Frontier Utilities

October 4th, 2007 · No Comments

Energy West Inc. (Nasdaq: EWST), a natural gas and energy marketing company based in Great Falls, Mont., has completed its acquisition of Frontier Utilities of North Carolina Inc. The purchase price was $4.5 million, plus certain adjustments for taxes and working capital. Energy West took possession of the Frontier Utilities operation, headquartered at 1927 Bridge St. in Elkin, N.C., on Oct. 1.

Interim President Thomas J. Smith of Energy West said, “We are extremely pleased to complete this transaction. We now have a 138-mile, high-pressure transmission system and a 149-mile distribution system serving an area with 127,000 households in an attractive and fast-growing area. The business should be accretive to earnings for Energy West’s current fiscal year and offers tremendous opportunity for growth as we expand the 1 percent natural gas utilization rate in Frontier’s service territory.”

Frontier Utilities of North Carolina Inc. has been a wholly owned subsidiary of Sempra Energy and the parent company of Frontier Energy LLC. Frontier Energy in 1995 won approval from the N.C. Public Utilities Commission to construct and operate a new natural gas pipeline and distribution system to provide service to four counties (later expanded to six: Surry, Ashe, Watauga, Wilkes, Yadkin and Warren) in North Carolina. Frontier Utilities in 1997 partnered with Sempra Energy Utility Ventures to build and operate the $55-million natural gas-distribution system.

Natural-gas distribution in Surry, Yadkin and Wilkes counties began in December 1998. Frontier Energy’s first customer was Wayne Farms, a leading producer and processor of broiler chickens, which uses natural gas at its feed mill in Elkin to make steam for a chicken feed process. Frontier Utilities Chairman Andrew Rea said at the time, “For the region, this is the culmination of five years of hard work and dedicated efforts by a broad range of community and business interests to develop a natural gas distribution system that will improve the quality of life for North Carolina residents and businesses.”

Sempra subsequently acquired Frontier Utilities and 100 percent ownership of the Frontier Energy distribution system. The pipeline was completed in 2002. Three years later, in 2005, Sempra announced its intention to sell Frontier Utilities to Energy West, pending regulatory approval that was not received until earlier this year.

According to Dun & Bradstreet, Frontier Energy has annual sales in excess of $5 million. It employs approximately 30 people.

Tags: Businesses · Utilities

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