Nuclear, Reactors

Dominion, Northeast Utilities Agree to Sale of Millstone Nuclear Station

RICHMOND, Va.-Dominion Resources Inc. and Northeast Utilities have reached an agreement under which Dominion will purchase the Millstone Power Station.

Under terms of the agreement, Dominion will pay approximately $1.3 billion in cash for the three-unit station on the Long Island Sound near New London, Conn. The purchase price includes approximately $105 million for nuclear fuel. Dominion expects to finance the acquisition initially with a bridge facility and ultimately to finance it with a combination of debt, equity and possible asset sales.

Dominion, a national industry leader in the safe and efficient operation of nuclear power, expects the acquisition to be immediately accretive to earnings per share, with about 5 cents of accretion in the first and second years of ownership and accelerated accretion beginning the third year.

The transaction is expected to close by April 2001. Regulatory approvals are required by the U.S. Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, the Federal Trade Commission or the Department of Justice, the Connecticut Department of Public Utility Control and other state public utility commissions where additional owners of minority portions of the station are headquartered.

Thos. Capps, Dominion chairman, president and CEO said:

“This acquisition supports our broader corporate strategy to become a major energy provider of choice in the Northeast, Midwest and Mid-Atlantic regions, home to 40 percent of the nation’s demand for energy. By adding Millstone to our diverse portfolio of generating assets, we’re positioned to increase our market share in New England significantly. We’ll accomplish this by operating Millstone as a safe, efficient, low-cost generator of base-load power.

“Under the existing structure of New England’s Independent System Operator, we’ll have added flexibility to sell station output utilizing a mix of long-term and short-term contracts. We’ll also be able to sell into spot markets, principally in the New England Power Pool. We’ll boost our existing electric production capability about 10 percent by adding about 2,000 MW to our existing portfolio of 20,000 MW. And we’ll also gain desirable geographic diversity by operating an energy center in a region with dual summer and winter peaks for power.

“We bring a long-standing record as operator of two of America’s safest and most efficient nuclear power stations and expect to operate Millstone as a reliable source of power offered at competitive prices. We know the station well and are entirely comfortable with this addition. Our company played a key role from 1996 until 1999 in helping to re-start Millstone and restore it to the excellent state of operations that exist today. Several Dominion managers worked at the station to help the NU leadership team during the restart process.

“We believe this is welcome news for Millstone employees because they’ll be joining a globally recognized nuclear program with a sound future. Millstone’s creative, energetic and resilient team will be a positive addition to the Dominion nuclear group. Both the Dominion and Millstone nuclear programs are safety focused and based on an internal model of continuous improvement. Both programs define competitive excellence as uncompromising commitment to safety, respect for regulatory compliance and appreciation for cost relative to value added. Under the terms of the agreement, each Millstone employee will be offered one year of employment at the time of closing.

“Dominion also has a long-standing commitment to corporate volunteerism, charitable giving and community involvement. We’re eager to join the state’s ranks of active corporate citizens.

“In short, we think our decision to invest in Connecticut as a major new corporate citizen will be welcomed by customers, employees, the community and our shareholders. We are putting stakes in the ground at Millstone because employees there are committed to operational excellence.”

Michael Morris, Northeast Utilities chairman, president and CEO said:

“We are extremely pleased that our Millstone nuclear units are being sold to an outstanding company committed to operating a safe and successful national nuclear organization.

“The men and women of Millstone have been working very hard to fulfill their commitment to become among the best in the nuclear industry. Dominion’s purchase of Millstone is a clear indication that this hard work is valued by a company with one of America’s finest operating records. Dominion’s strong safety focus and passion for continuous improvement are well known in the industry. Millstone employees have these essential core values and will be an excellent addition to Dominion’s successful nuclear environment.

“We also are very pleased that Dominion is a company dedicated to environmental stewardship and to playing a strong role as a corporate good neighbor in the Millstone area.

“I am happy with the way this sale was handled,” Morris added. “I applaud Connecticut legislators for the law that required our regulated companies to sell their generation assets. The Department of Public Utility Control has conducted the auction in a fair and expeditious manner, and we appreciate the sensitivity shown for our employees throughout the process.

“Dominion will be a welcome new competitor in the state,” Morris concluded.

Subsidiaries of Northeast Utilities own 100 percent of Millstone Unit 2, an 870 MW pressurized water reactor manufactured by Combustion Engineering, and 68 percent of Unit 3, a 1,150 MW pressurized water reactor manufactured by Westinghouse that has several other partial owners. Dominion will acquire 100 percent ownership of Unit 2. It will acquire 93.47 percent ownership of Unit 3, consisting of all of NU’s 68 percent interest and 25.5 percent owned by other entities.

The sale will also include Millstone Unit 1, a 660 MW boiling water reactor manufactured by General Electric, which was retired in July 1998 and is currently being placed in a safe storage condition for future decommissioning.

Dominion owns and operates the North Anna Power Station, which has two 900 MW pressurized water reactors, and the Surry Power Station, which has two 800 MW pressurized water reactors. All four units have reactors designed by Westinghouse. Both facilities are located in Virginia.