AEP to sell Plaquemine cogeneration facility to Dow Chemical

1 September 2006 -- American Electric Power (AEP) has reached an agreement to sell its Plaquemine Cogeneration Facility in Plaquemine, Louisiana, US, to The Dow Chemical Co.

Under terms of the agreement, Dow will pay AEP $64 million at closing. The sale agreement also allows AEP to participate in gross-margin sharing on the Plaquemine facility for five years. Dow will also reduce AEP's existing below-current-market long-term power supply contract with Dow in Texas by 50 MW. AEP retains the rights to any judgment paid by Tractebel Energy Marketing Inc. (now known as Suez Energy Marketing N.A. Inc.) for breaching a long-term contract to purchase power generated by the Plaquemine plant. AEP received a judgment of $123 million plus interest in August 2005. That judgment is under appeal.

"Because of Tractebel's breach of contract, the Plaquemine Cogeneration Facility has been a drag on our earnings since it began operating in 2004," said Michael G. Morris, AEP's chairman, president and chief executive officer. "In 2000, when AEP began the project, Tractebel signed a long-term contract to purchase the large quantities of electricity that were not needed by the Dow Chemical complex. We would not have gone forward with the construction without a buyer for that electricity. When Tractebel breached the contract, we were left to contend with attempting to sell the power into an overbuilt, illiquid regional market, which resulted in losses.

"Selling the plant does create a one-time loss, but it eliminates what we project would be an escalation of the plant's ongoing losses," Morris said.

The 880-MW Plaquemine Cogeneration Facility has four 170-MW gas-fired combustion turbine generators and a 200-MW steam turbine. It began commercial operations on March 18, 2004. Steam from the cogeneration facility, located inside Dow Chemical's plant near Baton Rouge, La., is supplied to Dow Chemical. Power output from the plant was to be sold to Tractebel under long-term contract.

Sponsored by FLSmidth
Recommend this article Recommend this article () You recommended this article You recommended this article ()
Follow Power Engineering on Twitter

Products Showcase

Dynamic Fluoride Ion cleaning DFIC of industrial natural gas turbines Hi-Tech Furnace Systems

Dynamic Fluoride Ion Cleaning of IGT Parts

The Dynamic Fluoride Ion Cleaning (DFIC) Process from Hi-Tech Furnace Systems is able to clean deep, narrow cracks of oxides by cycling between negative, atmospheric, and positive pressure.

Latest News

Shutterstock coal production trucks

Weekly Coal Production

The Weekly Coal Production shows how much coal is being produced across the U.S.

Federal Reserve Bank of Dallas Weekly Economic Indicators financial business

The Federal Reserve Bank of Dallas' Economic Indicators

The Federal Reserve Bank of Dallas offers a glimpse into how the markets are doing domestical...

Kvaerner awarded contract for gas-fired power plant in Delaware

Kvaerner North American Construction Inc. and its joint venture partner, Parsons Brinckerhoff...

Canadian Solar purchases two solar projects

Canadian Solar Inc. has acquired a majority interest in two utility-scale solar power project...

Operators Restart Unit 2 at PPL Susquehanna

Unit 2 at the PPL Susquehanna nuclear power plant near Berwick, Pa. resumed generating electr...

Settlement agreement limits cost recovery at Edwardsport

The Indiana Utility Regulatory Commission (IURC) on Dec. 27 modified and approved a settlemen...

Toshiba in talks to sell portion of Westinghouse nuclear unit

Toshiba Corp is in talks  to sell up to 16% of its stake in the Westinghouse Electric Co...

Utah nixes nuclear waste storage facility

Plans to park radioactive waste at a storage facility in Utah have been officially called off.

Archived Articles

2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013

Current Magazine Issue

08/01/2013
Volume 117, Issue 8
1308PE_C1_digital

Power Industry Wire News

Holloman Energy Corporation PEL 444 and 112 Updates

Holloman Energy Corporation PEL 444 and 112 Updates

UL Workplace Health & Safety Honored as Learning! 100 Award Winner for Innovation in Training

UL Workplace Health & Safety Honored as Learning! 100 Award Winner for Innovation in Tr...

Green Mountain Power and NRG Energy Partner to Make Vermont a National Leader in Sustainable Energy

Green Mountain Power and NRG Energy Partner to Make Vermont a National Leader in Sustai...

Enbridge Energy Partners, L.P. to Present at the Barclays CEO Energy-Power Conference

Enbridge Energy Partners, L.P. to Present at the Barclays CEO Energy-Power Conference

Cardinal Energy Acquires the Fortune Lease

Cardinal Energy Acquires the Fortune Lease

Power Engineering

Article Archives for Power Engineering Magazine

Continuing Education

Professional Development Hours

To access a course listing associated to a specific topic listed below, click on the topic of choice from the list below.

Latest Energy Jobs

View more Job Listings >>