Divestiture UpdateThe divestiture bus rolls on.
Several more generating plant sales have been announced in the past few months, including several in parts of the country not yet that far along in electricity industry deregulation.
The United Illuminating Company (UI) has agreed to sell its two operating fossil fuel power plants to Wisconsin-based Wisvest Corp., a subsidiary of Wisconsin Energy Corp. United Illuminating will receive $272 million in cash. UI intends to use the sale proceeds to fund growth opportunities and achieve the 10 percent rate reduction mandated under Connecticut`s restructuring law. The sale is expected to close in the spring of 1999.
The deal includes the 590 MW Bridgeport Harbor Station, which contains one oil-fired unit, one oil- and coal-fired unit, and one jet-fueled unit, and the 466 MW New Haven Harbor Station, an oil- and gas-fired unit. A third plant, the 77 MW English Station, was offered for sale but attracted no bids. UI`s interests in the Seabrook and Millstone 3 nuclear power stations were not part of the current divestiture program, although they must be either divested or moved into separate utility affiliates by 2004.
GPU Inc. has agreed to sell the remainder of its fossil fuel and hydroelectric generating assets to Sithe Energies for $1.72 billion. GPU also sold its 20 percent interest (87 MW) in the Seneca pumped-storage hydroelectric plant to FirstEnergy Corp. for $43 million. FirstEnergy already owns 80 percent of the Seneca plant. The sales are expected to close by mid-year 1999.
In the Sithe deal, Sithe will be purchasing 23 power plants with a combined capacity of 4,117 MW. Also included in the sale are 18 generation development properties, three support service organizations and the Johnstown, Penn. office building. As part of the agreement, GPU`s operating subsidiary, GPU Energy, has an option to buy capacity at fixed rates through mid-year 2002. The maximum amount of capacity that can be purchased under the agreement will depend both on GPU Energy`s yearly needs and other available sources of capacity.
PP&L Global Inc., a subsidiary of PP&L Resources Inc., has announced two generating asset purchases in recent months. In the first, PP&L Global will acquire 13 Montana Power power plants for a purchase price of $1.586 billion. In the second, PP&L Global will acquire various hydroelectric assets from Bangor Hydro-Electric Co. for $89 million.
The Montana Power deal includes the 163 MW Corette coal-fired power plant, Montana Power`s interest in the 1,874 MW Colstrip coal-fired power plant and 11 hydroelectric facilities in the Columbia and Missouri-Madison river basins with a combined capacity of 577 MW. The purchase will provide PP&L Global with 2,614 MW of generating capacity in Montana. The Bangor deal includes eight hydroelectric stations along the Penobscot and Union Rivers in Maine, and Bangor`s 8.33 percent interest in the 620 MW Wyman Unit 4 hydroelectric facility in Yarmouth, Maine. Total capacity being acquired by PP&L Global is about 95 MW. With the deals, PP&L Global now has commitments to purchase or develop more than 4,000 MW in the United States over the next several years.
NRG Energy is acquiring Eastern Utilities Associates` (EUA) 160 MW coal- and oil-fired Somerset Station in Massachusetts for $55 million. The deal also includes an additional 69 MW of currently deactivated capacity at the Somerset site, and real estate and generating equipment at the 1.2 MW Pawtucket Hydro Station in Rhode Island.
In another interesting asset deal related to deregulation and improved positioning in a competitive environment, Duquesne Light and FirstEnergy Corp. have agreed to exchange interests in several generating facilities in Ohio and Pennsylvania. Duquesne will sell its partial interests in three nuclear plants (Beaver Valley Units 1 and 2 and Perry Unit 1) and five fossil plants (Sammis Unit 7, Eastlake Unit 5 and Bruce Mansfield Units 1, 2 and 3), with a total capacity of 1,436 MW. FirstEnergy will sell three fossil plants (Avon Lake, Niles and New Castle) with a combined capacity of 1,298 MW.
Duquesne Light will immediately sell the three transferred plants as part of its divestiture agreement with the Pennsylvania Public Utilities Commission. The transaction will provide First Energy with exclusive ownership and operating control of all the generating assets that are now jointly owned and operated under the Central Area Power Coordination Group (CAPCO). CAPCO was formed in 1967 to jointly develop power generation and transmission facilities in the region; all of its original members except Duquesne Light are now part of FirstEnergy. p
By Brian K. Schimmoller, Associate Editor