The California Public Utilities Comission today issued an order that allows the $15.2 billion management buyout of pipeline operator Kinder Morgan (KMI) to proceed. Kinder Morgan didn’t get everything it wanted in the ruling, which resulted from an ongoing fight it is having with several big oil companies, including ExxonMobil (XOM) and Valero (VLO). But it does mean it can now complete a deal whose existence was first announced almost exactly one year ago. The state regulator’s approval was the last of many hurdles the deal needed to close.

When the deal was announced last year, it was the second-largest private equity deal in history. Some shareholders have complained about the seemingly conflicting roles played by Goldman Sachs (GS); you can read a fuller account of the deal’s twists and turns here.

Kinder Morgan has yet to announce the California ruling. Its spokesman, who gave a comment this afternoon to Reuters, says the deal is still scheduled to close “in the second quarter.”

I have an article in the current issue of Fortune (the full text is here) about the $15.2-billion deal to take private Kinder Morgan Inc., (KMI) a natural-gas pipeline company in Houston. We put it online today. This story has lots of big names on Wall Street: Goldman Sachs (GS), which is the deal’s investment banker, lead investor and debt-syndicate leader; Carlyle Group, another major investor; Blackstone Group and Morgan Stanley (MS), who advised the company’s board of directors; and CEO Richard Kinder himself, a former president of Enron and one of the most brilliant operators and financial engineers in the energy business.

It’s a complex  story because it’s a complex deal. But through this one company you can understand all the cross-currents at play in the world of private equity today. Here’s a snippet:

It’s not just the war chests that are bigger this time; the potential conflicts of interest are too. Wall Street investment banks have plunged full force into the private-equity business, further clouding their already compromised judgment as corporate advisors. “Hostile” takeover bids by buyout firms have become far less common, as corporate managers have learned to share in the lucrative paydays that PE firms promise.

And the temptations have only become greater with the proliferation of so-called club deals, in which multiple private-equity firms team up to make bigger and bigger offers, which typically go unchallenged, for companies previously considered too large to devour. In October the Justice Department said it was beginning a preliminary investigation into potentially anticompetitive behavior by private-equity firms in club deals.

Since we went to press there’s been another interesting development in the story, one that Kinder Morgan hasn’t bothered disclosing yet to shareholders. In late April the California Public Utility Commission issued a preliminary ruling that would allow the deal to move forward by late May. The California regulator is involved because a group of oil companies  –Valero (VLO), Ultramar, BP (BP), ExxonMobil (XOM) and Chevron (CVX) – opposed the merger as part of a longstanding business dispute having to do with rates Kinder Morgan charges to transport oil on its pipelines. This week the oil companies asked the commission to delay its final ruling pending Kinder Morgan’s adherence to certain conditions requested by the oil companies. If the CPUC rules against Kinder Morgan, this deal could get delayed as late as September. If the commission rejects the request, Rich Kinder could get his company by Memorial Day.