Dominion's natural gas distribution companies sold

Energy company Dominion Inc. has sold its Dominion Peoples and Dominion Hope natural gas distribution companies for $910 million to investment fund Babcock & Brown Fund North America.

This is Richmond, Va.-based Dominion's second attempt at selling the two distribution companies. An earlier try to divest to Pittsburgh-based Equitable Resources ran into potential regulatory problems and was scuttled by both parties.

"Dominion Peoples and Dominion Hope are well-run utilities with highly skilled employees and excellent assets serving outstanding communities," said Dominion President and CEO Thomas F. Farrell II, in a statement. "We look forward to working with Babcock & Brown to make this a smooth and timely transition for everyone involved."

Dominion Peoples serves about 359,000 customers in Pennsylvania from its Downtown headquarters, while Dominion Hope provides natural gas to some 115,000 West Virginia customers, according to Dominion.

The parent company said it plans to use the $675 million in after-tax proceeds to reduce debt.

San Francisco-based Babcock & Brown Fund North America owns and manages energy and infrastructure companies throughout North America. Its investors include public and employee pension funds.

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With 1 site and 2 suitors, Hill must chose a grocer

First it was one, and now it's two grocery chains that want to serve the city's Hill District community.

Problem is, both the discount-oriented Save-A-Lot chain and a developer proposing to build a full-service Kuhn's Market are targeting what is essentially the same area along Centre Avenue for their projects.

Now it will be up to the Urban Redevelopment Authority and the community to choose between the two, proponents of the rival projects say.

"I think that having an additional grocery store proposed on the same property is probably good news," said Rick Meyer, vice president of new market development for St. Louis-based Save-A-Lot. "That community for years has fought to have a quality grocer, and they haven't been successful."

That doesn't mean, however, that Save-A-Lot doesn't want the community to pick its plan to put a 16,000-square-foot-plus store touting up to 40 percent discounts on items sold there.

"Save-A-Lot remains absolutely 100 percent committed to open a store in the Hill District," Meyer said. "We also are 100 percent confident that from a quality standpoint and atmosphere, and from a pricing standpoint, we will deliver a first-class grocery for the community."

The second proposal, announced last week by developer McCormack Baron Salazar and the Hill House Economic Development Corp., calls for a 100,000-square-foot development that would include a 50,000-square-foot Kuhn's Market.

Supporters of the Kuhn's plan feel virtually the same way about the community having two proposals to consider, said Evan Frazier, CEO of Hill House.

"This is an opportunity, really, to look at what is the best fit for the neighborhood," he said.

Frazier believes the Kuhn's market would be best because it would answer the community's long-standing desire to bring a full-service grocery store to the neighborhood.

Also, the store would anchor a larger development that calls for a pharmacy, dry cleaner drop-off service, bakery, deli and flower kiosk, and the development team has said it is working to secure additional outlets, such as a bank and a restaurant.

Howard Slaughter, CEO of Landmarks Community Capital Corp., said rising food prices and the effort put in to acquaint the Hill District community with the Save-A-Lot plan are important facts to consider.

"Save-A-Lot submitted its full proposal to the URA on Monday, and they are ready to build this year if it is accepted," said Slaughter, who has been working to push the discount store's plan.

"The 40 percent savings that they offer will be a big savings for residents of the Hill District, and they also have pledged to hire local residents," Slaughter said.

Slaughter said the Save-A-Lot model, which stocks more than 12,000 items, drew a generally favorable response when officials showed off a similar store in Wilkinsburg to Hill District residents on a tour in April. Once the store opens, it will likely attract companion development that includes services that the community has sought, he said.

"The URA will study both proposals, and once that is completed, I will likely call a community meeting and put both proposals in front of the community," said Tonya Payne, city councilwoman and member of the URA board of directors.

That could take place before the end of July, said Payne, whose district includes the Hill.

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Market Square investor threatens to pull out

The Pittsburgh History & Landmarks Foundation, a major investor in Market Square's revitalization, threatened to pull out today if the Pittsburgh Downtown Partnership sticks to a plan to close some of the square to vehicles.

The foundation is investing $3.5 million to renovate three vacant buildings on Graeme Street into Market at Fifth, a complex of seven upper-floor apartments, a ground-floor restaurant and a rooftop garden. The partnership's plan would close Graeme, the apartments' entrance, and nearby McMasters Way.

"We do not see how people are going to want to rent apartments on a dead-end street. People do not frequent dead-end streets," said attorney Anne E. Nelson, who voiced the concerns at a meeting of the city Historic Review Commission. "Historically, Market Square has always had full traffic access. Removing traffic from the street has worked almost nowhere (in commercial districts) in the United States."

The commission approved Pittsburgh Downtown Partnership's preliminary plans for Market Square, but members urged the partnership, a nonprofit that represents Downtown business owners, to find a compromise with the foundation.

"We're going to do what's best for the square," said Dina Klavon, the designer the Pittsburgh Downtown Partnership has hired to guide Market Square's makeover.

Klavon said she's open to changes and plans to meet with Pittsburgh History & Landmarks officials.

"We're trying to give Market Square back to the pedestrian," said Mike Edwards, president of the Pittsburgh Downtown Partnership. "Right now it's a thoroughfare. We want it to be a destination."

Edwards said renovating Market Square will cost $4.8 million to $5 million. Construction could start in the spring.

The most striking feature about Klavon's design is that it would make Market Square a one-level European piazza.

The road would be flush with the sidewalks and outdoor cafes, which would be differentiated by using various types of pavement and cobblestone. Traffic and parking would be permitted on the perimeter of the square. No traffic would be allowed in the middle where Market Street and Forbes Avenue meet.

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Dominion plans gas pipeline across state

Dominion Resources Inc., parent of Dominion Peoples Gas, hopes to construct a 280-mile natural gas pipeline from Greene County to Chester County. Joining Dominion in the pipeline project is Antero Resources, a Denver-based, privately held natural gas exploration production company, which said Monday it paid Dominion $552 million for drilling rights on 205,000 acres in the Marcellus Shale formation primarily in Western Pennsylvania and West Virginia. Dominion and Antero initially will commit to providing 500 million cubic feet per day of natural gas to the proposed Dominion Keystone pipeline, which would transport up to 1 million cubic feet of natural gas daily. Dominion will judge interest in the pipeline's capacity this summer.

Calgon workers nix deal

By a margin of more than 2-to-1, picketing workers at Calgon Carbon Corp.'s Neville Island plant on Monday rejected a labor agreement proposed by management during the weekend, said United Steelworkers Local 5032. With 37 opposing and 17 rejecting, most of the workers balked at the company's continued call for cuts to health and pension plan benefits. USW bargainers made no recommendation as to how members should vote, the union said. Nearly 60 workers have been locked out at the plant since Feb. 29, four weeks after their contract had expired. Calgon Carbon makes products used to purify air and water. Labor negotiations are supposed to resume today.

StarKist to be sold

Del Monte Foods Co. said Monday it will sell its seafood business, which includes the StarKist brand, to a South Korean company for $363 million as it focuses on higher margin produce and pet foods. Del Monte, which operates brands such as Contadina, Kibbles 'n Bits and 9Lives, said the divestiture will improve margins, eliminate a source of earnings volatility and reduce debt. In fiscal 2008, the seafood business generated about $560 million in sales. The sale to South Korea's Dongwon Enterprise Co. includes Del Monte's manufacturing operations in American Samoa; Manta, Ecuador; and certain StarKist manufacturing assets in Terminal Island, California and Guayaquil, Ecuador.

Entrepreneur awards

Western Pennsylvania companies swept seven of the eight categories in the 2008 Ernst & Young Entrepreneur of the Year awards for the Tri-State region on Friday. The seven winners and their categories are: Walter Dollard, president, and Michael Gunniers, principal of Premier Automation, Monroeville (Industrial/Retail Products); D. Raja, CEO of Computer Enterprises, Pittsburgh (Integrated Technology); Peter Michael DeComo, CEO of Renal Solutions Inc., Marshall (Healthcare); Inderpal Guglani, CEO of Guru.com, Pittsburgh (Business Services); Sean McDonald, CEO of Precision Therapeutics, Pittsburgh (Applied Sciences); Denise DeSimone, CEO of Advanticom Inc., Pittsburgh (Specialty Services); and John Manzetti, CEO of the Pittsburgh Life Sciences Greenhouse, Pittsburgh (Supporter of Entrepreneurship). An upstate New York company won in the Advanced Technology Solutions category.

Health deal done

Highmark Inc. and West Penn Allegheny Health System said Monday they signed a five-year contract between the region's largest health insurer and West Penn Allegheny's six hospitals. Terms weren't disclosed. "Maintaining our long-standing relationship with West Penn Allegheny was very important to us and our members," Highmark President and CEO Kenneth Melani said in a statement. "The system plays an important role in the health care of our region, and we are pleased to be able to have their services available to Highmark members."

Bank chief sees losses

Bank of New York Mellon Corp. CEO Robert Kelly said he expects more losses for banks, creating buying opportunities for his and other financially healthy banks. Fallout in the financial sector would allow stronger banks "to acquire the not-so-strong," Kelly said in a speech to the European American Press Club in Paris. Banks will raise capital and cut dividends, said Kelly, who also predicted the crisis in the U.S. housing market will continue.

Other business news

• Goodwill of Southwestern Pennsylvania said it will open a store in Peters in early August to serve northern Washington County and nearby Pittsburgh suburbs such as Bethel Park and Upper St. Clair. Used clothing and household items are being accepted now at the store, a former Prizant's Carpet location at 3492 Washington Road. Renovations are under way at the 12,000-square-foot store. About 15 people from the area will be hired. Goodwill runs 23 stores.

• Cellumen Inc. of Harmar announced a research collaboration Monday with the National Center for Toxicology Research, part of the Food and Drug Administration. The company will use its CellCiphr toxicity risk assessment technology to study liver toxicity compounds, including failed and marketed drugs, for the NCTR. The government center then wil use the results to create a liver toxicity knowledge base.

• Only 61.9 percent of Pittsburgh-area company executives expressed confidence in their prospects in June, according to a survey issued Monday by National City Corp. The results were a sharp drop from 67 percent in May and 68.4 percent a year ago. In the last 12 months, only March's 61.8 percent showing was worse, the bank's survey showed. Businesses expressed the most confidence last July, when 70.9 percent of respondents were up-beat.

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Natural gas prices predict expensive winter

Natural gas prices in the Pittsburgh region will rise again starting today. While many families use gas in the summer only to cook, heat water or dry clothes, the news is a worrisome sign of what it could cost this fall to turn on the furnace.

Columbia, Dominion Peoples and Equitable -- the Pittsburgh area's three biggest natural gas distribution companies -- have hiked their rates by about 18 to 31 percent for the next three months, based on what they expect to pay for gas to supply their customers. Equitable said Monday it wants to increase its gas delivery rate.

The new rates are in line with what other utilities statewide plan to charge during the year's third quarter -- when prices typically drop or stay the same due to low demand, said Pennsylvania Consumer Advocate Sonny Popowsky.

"I'm afraid we're headed for another catastrophic year, in terms of natural gas prices," he said.

Unlike the winter of 2005, when hurricanes disrupted gas flow from the Gulf of Mexico and led to temporarily spikes, today's prices simply are trending upward.

Natural gas futures have risen 97 percent in the past year, following crude oil prices. For residential gas customers, "That is going to hit home in December and January," Popowsky said.

Dominion Peoples customers who annually use 98,000 cubic feet of natural gas can expect their monthly bills to rise by almost 23 percent to $163.32. The company raised its purchased gas cost by a similar percentage in April.

Columbia's increase for the July to September quarter is 31 percent, which brings a bill for comparable gas usage to $167.86. Equitable's increase of almost 18 percent would result in a $174.64 bill.

Together, the three companies serve more than 900,000 customers. They listed several reasons for rising costs:

• Demand for natural gas is rising, as industries that can switch from oil to gas and other fuels do so.

Temperatures in the region changed rapidly from cold to hot this spring, prompting customers to use their furnaces longer, then switch to air conditioners that run on electricity from gas-fired power plants.

Those factors and other market conditions have caused supplies of gas in storage to hit five-year lows.

"It all comes down to basic supply and demand, and there still is pretty considerable demand" for the fuel, said Rick Gordon of Gordon Energy Solutions LLC, an oil and gas consulting firm in Kansas City, Mo. Long-term, gas wells being drilled in Pennsylvania and other states could help to lower prices somewhat, he said.

For now, customers like Tim Nuttle are doing what they can to trim bills. A professor at Indiana University of Pennsylvania, Nuttle had a home energy audit done and has added insulation to his 138-year-old home in the North Side's Mexican War Streets.

An Equitable customer, he's considering a more efficient furnace, a tankless water heater and valves for his radiators that control the temperature room by room.

"There's a lot of complaining -- people want the government to do something (about energy costs), but they don't want to do anything themselves. I'm saving hundreds of dollars with a few simple things," he said.

Equitable, meanwhile, asked state utility regulators yesterday to approve a $51.9 million-a-year increase in its delivery rate, the North Shore-based company's first increase in that part of a customer's bill in 11 years.

The hike -- which would raise most bills by around 10 percent -- is proposed to take effect Sept. 30, though a state Public Utility Commission review likely will delay it, and result in a lesser increase.

Equitable spokesman David Spigelmyer said nearly one-third of the planned increase is needed to cover the cost of the state-mandated program to help financially troubled customers pay their bills. About 19,000 customers are in the program, he said.

The company has faced higher costs to maintain and update pipelines and other equipment. About $30 million a year is invested in upgrading the system, he said.

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Michael Baker profits jump 87.4 percent

Michael Baker Corp. on Monday issued financial results for 2007 after sorting out accounting errors that forced the Moon-based engineering and energy management company to restate results for 2006 and the first nine months of 2007.

Restating 2006's financial statement made 2007's results look even better.

For 2007, Baker reported net income of $19.3 million, or $2.18 a share, up 87.4 percent from 2006 net income of $10.3 million, or $1.19 a share. The 2006 net income figure originally had been reported as $11.8 million, or $1.36 a share.

Revenue for 2007 was $727 million, up 12.4 percent from 2006's $647 million. The 2006 figure was restated downward from $651 million originally reported.

"We are pleased to have completed the restatement and to be able to report our outstanding 2007 financial performance," CEO Bradley L. Mallory said in a statement.

Baker over the last three years has been forced to request extensions from the Securities and Exchange Commission for reporting its financial results due to the company finding, then correcting, accounting errors.

Baker's engineering segment last year had revenue of $401 million, up from $380 million in 2006, while the company's energy business reported 2007 revenue of $326 million, compared to restated 2006 revenue of $267 million. Originally, the Baker energy business had $270.9 million in 2006 revenue.

"We can now place our complete focus on executing our business strategy for the company," Mallory said in a statement. "(That) includes our core engineering business, both organically and through acquisition, resuming our evaluation of strategic alternatives, including a potential sale of our energy business, and continuing to make the necessary process improvements which will contribute to increasing our profitability on a consistent basis."

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Baker issues restated profits that show improvement

Michael Baker Corp. today issued financial results for 2007 after sorting out accounting errors that forced the Moon-based engineering and energy management company to restate results for 2006 and the first nine months of 2007.

Restating 2006's financial statement made 2007's results look even better.

For 2007, Baker reported net income of $19.3 million, or $2.18 a share, up 87.4 percent from 2006 net income of $10.3 million, or $1.19 a share. The 2006 net income figure originally had been reported as $11.8 million, or $1.36 a share.

Revenue for 2007 totalled $727 million, up 12.4 percent from 2006's $647 million. The 2006 figure was restated downward from $651 million originally reported.

"We are pleased to have completed the restatement and to be able to report our outstanding 2007 financial performance," CEO Bradley L. Mallory said in a statement.

Baker over the last three years has been forced to request extensions from the Securities and Exchange Commission for reporting its financial results due to the company finding, then correcting accounting errors.

Baker's engineering segment last year had revenue of $401 million, up from $380 million in 2006, while the company's energy business reported 2007 revenue of $326 million, compared to restated 2006 revenue of $267 million. Originally, the Baker energy business had $270.9 million in 2006 revenue.

"We can now place our complete focus on executing our business strategy for the company," Mallory said in a statement. "(That) includes our core engineering business, both organically and through acquisition, resuming our evaluation of strategic alternatives, including a potential sale of our energy business, and continuing to make the necessary process improvements which will contribute to increasing our profitability on a consistent basis."

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