The OEB is trying to determine if Enbridge needs provincial approval for the status change of Spectra's Union Gas subsidiary.Dan Riedlhuber/Reuters
The Ontario Energy Board is looking into Enbridge Inc.'s $37-billion deal to acquire Houston-based Spectra Energy Corp. to determine whether it must approve the resulting change in ownership of Spectra's Union Gas subsidiary.
Enbridge says it intends to maintain separate operations for Toronto-based Enbridge Gas Distribution and Chatham, Ont.-based Union Gas, which together provide most of Ontario's gas supply.
In announcing the megadeal on Tuesday, Enbridge Inc. chief executive officer Al Monaco indicated that the partners do not believe they need provincial approval for the change in Union's status.
However, an OEB spokeswoman said on Thursday that the regulator may conclude differently. "We are reviewing the matter as additional details become available to assess what, if any, OEB approvals may be required," Karen Evans, the board's director of corporate communications, said in an e-mailed statement.
Under provincial legislation, transactions that involve the sale of a gas utility or the acquisition of control of a gas utility need to be brought to the board for approval, she noted.
Enbridge and Spectra are aiming to close the deal in the first quarter of 2017, and must submit the merger to competition regulators in both the United States and Canada. Mr. Monaco and Spectra CEO Greg Ebel said there is little overlap in the two energy infrastructure companies and they do not expect major problems with competition issues.
Enbridge Inc. spokesman Todd Nogier reiterated that the companies believe that "there are no provincial regulatory requirements."
"Union Gas and Enbridge Gas Distribution are two great entities that are run very well today and we will continue to operate them as two companies," he said.
The utilities operate as regulated monopolies in distinct service areas, with Union covering southwestern, northern and some eastern portions of the province and Enbridge serving the Greater Toronto Area and Eastern Ontario, including Ottawa, as well as areas of western Quebec, New Brunswick and New York.
Public interest lawyer Michael Janigan said the regulator should ensure that the interests of consumers are protected in the aftermath of a mega-deal.
"In any deal, they will want to see where the benefits are going to go, and how to ensure benefits go to the customers and not just the shareholders," said Mr. Janigan, a lawyer for the Public Interest Advocacy Centre who appears regularly before the OEB.
"There are a whole host of questions that would need to be answered."
But a representative of industrial gas users said she saw little to fear from the Enbridge-Spectra deal, since their utilities operate their distinct, regulated territories and rarely compete.
"I don't think it has an impact on competition at the market level," said Shahrzad Rahbar, president of the Industrial Gas Users Association.
She noted that the gas industry is facing significant challenges as Ontario introduces a carbon tax, which will be levied on the distributors, and both the federal and provincial governments pursue policies aimed at reducing fossil-fuel demand and introducing more renewable energy into the system.
At the head office level, the Enbridge's acquisition of Spectra's Ontario subsidiary "may allow for a more strategic look at what the energy mix of the province should be and what opportunities there are" for the industry, Ms. Rahbar said.