Without the sale, the merger of Pacific's natural gas pipeline with Enova's electric power business would have likely resulted in higher electricity prices to California consumers. This is the Department's first challenge to a merger between a gas and an electric utility, and comes at a time when California is restructuring its electric power industry to allow for more competition. As California and other states deregulate their electric power industries, vigilant antitrust enforcement is vital to protect and preserve emerging competition. When we see competitive concerns, we will seek structural relief.
Natural gas is an important input fuel for generating electric power in many parts of the country.
The Department filed suit in U.S. District Court in Washington, D.C. to block the merger. At the same time, a proposed settlement was filed that, if entered by the court, will settle the lawsuit. Gas-fired plants are the most costly to operate, and they set the price for all electricity sold during times like the summer when electricity demand is at its highest. Because the price of electricity will soon be dependant upon the highest priced producer in the California Power Exchange, this would cause electricity prices to California consumers to go up. The settlement requires Enova to divest its largest low-cost electricity plants.