Gas

PSEG forges $862 million turbine agreement with GE

NEWARK, N.J., Oct. 31, 2000—To fulfill its strategic expansion across the nation, PSEG Power has penned an agreement with GE Power Systems for 30 gas and steam turbines.

The acquisitions represent more than 10,000 MW of capacity and a value of $2 billion. The most recent announcement brings to 76 the number of turbines purchased under an expansion program begun two years ago.

The latest agreement with GE Power Systems is for $862.8 million and includes 15 Model 7FA gas turbines, 8 Model 7EA gas turbines, 7 large steam turbines, and related equipment. The total of 60 gas turbines and 16 steam turbines purchased from GE since 1998 have or will be used at projects in the Northeast and Midwest.

PSEG Power currently has more than 14,000 megawatts (MW) of electric generating capacity in operation, construction, or advanced development and the company expects this portfolio to grow to the 18,000-20,000 MW range over the next three years.

Frank Cassidy, PSEG Power president and chief operating officer, said, “GE Power Systems is a leader in both product development and customer service. We view our relationship with GE as a strategic advantage. The purchase agreements we’ve executed clearly demonstrate PSEG Power’s commitment to growth and our ability to fulfill this strategy.”

Mark M. Little, vice president of energy products for GE Power Systems, said the company is very confident that it can deliver on the business that PSEG Power has entrusted them with. “With over 1,000 F machines on order or in flow, and over 200 already operating delivering 3 million hours of reliable operation, a reliability record that’s three times better than the industry, I am confident that (PSEG) has placed its trust in a vendor who absolutely will deliver,” Little said.

The work force at the Schenectady plant should get much busier over the next two years as a result of the new contract. “With the business that we’re gathering around the world, our work force in Schenectady has been challenged and is growing very nicely,” Little said.

The purchases announced today will represent 10 percent of PSEG’s capacity.

Of the 10,000 MW of capacity to be installed, roughly 3,000 MW will be installed in N.J., 750 MW will be installed in New York, and the rest will be spread around the Northeast and the Midwest. More of the remaining capacity will go to the Midwest, which PSEG feels is a very attractive market right now, Cassidy said.

Included in PSEG’s plans are an installation in the Bethlehem Energy Center a 750 MW combined cycle plant which would feature 7 F gas turbines and one steam turbine to replace the 400 MW of gas and oil-fired capacity, Cassidy said.

To pay for this move, PSEG hopes to conduct initial financing in the first quarter of 2001, once it has worked out its Energy Master Plan settlement.

PSEG still is in litigation about the recovery of its stranded costs under New Jersey’s Energy Master Plan. In August, the company transferred about 10,200 MW of its electric generating facilities to PSEG Power, LLC, an unregulated power generation affiliate. The transfer was executed in compliance with a one-year time frame mandated by the NJ Board of Public Utilities (BPU) in its restructuring orders for the utility. The assets were transferred at $2.443 billion.

Until then, the purchase is being financed through various public service enterprise group facilities such as commercial paper and short-term notes.

Cassidy also noted that PSEG Power has built relationships with a team of key contractors and suppliers that are leaders in their fields locally, regionally, and nationally. The group includes SM Electric (electrical contracting); J. Fletcher Creamer (civil contracting); Foster Wheeler Energy Corporation (heat recovery steam generators); Hamon Inc. (cooling towers); Turtle & Hughes (electrical material supplies); Holtec International (condensers); and Duke/Fluor Daniel (engineering, procurement, and construction services).

Since June, 1999, PSEG Power has acquired more than 10,000 MW of generating assets from its utility affiliate, Public Service Electric and Gas Company (PSE&G); acquired the 400-MW Albany Steam Station (Bethlehem, NY) from Niagara Mohawk; brought on line more than 330 MW of new combustion turbine capacity in New Jersey; announced plans to construct 1,700 MW of new combined cycle capacity at two existing New Jersey power plant sites; announced the acquisition of 545 MW of nuclear capacity from Conectiv Energy; and assumed development responsibility for 2,800 MW of combined and simple cycle capacity at sites in Ohio, Illinois, and Indiana from its PSEG Global affiliate.

PSEG Power’s energy trading business is one of the largest in volume in the U.S.

PSEG Power’s parent company, PSEG, is a diversified energy holding company headquartered in Newark, NJ.