Edison International’s wholly-owned independent power subsidiarywill acquire all the fossil-fuel generating assets of CommonwealthEdison. The company will pay about $5 billion for a package of coaland gas-fired plants with total capacity of 9,772 megawatts (MW).Edison Mission Energy has also committed to build 500 MW ofgas-fired generating capacity in Chicago.

John E. Bryson, CEO of Edison International, parent of SouthernCalifornia Edison, said the plants have excellent access toattractive markets in the Midwest and will continue to servenorthern Illinois. “These assets represent some of the mostcompetitive generation in the region. The acquisition complementsthe recent acquisition of the Homer City Generating station in theMid-Atlantic region, giving us a strong generation presence acrossthe United States.”

The sale properties include six coal-fired plants that togetherhave 5,645 MW of capacity, and Collins Station in Morris, IL, whichhas 2,698 MW of capacity and runs on natural gas or oil. The ninepeaking units to be sold have a combined capacity of 1,429 MW, arefueled by either gas or oil and are located at nine ComEd sites inChicago (three locations), Waukegan, Joliet, Lombard, Rockford,Eola, and South Chicago Heights. The plants range in age from 21 to47 years old; most having been built in the late 1950s and early’60s.

ComEd parent Unicom got about $1.76 billion over book value forthe plants combined. The sale will enable Unicom to improve itsfinancial structure and redirect investments, said Unicom andCommonwealth Edison CEO John W. Rowe. The gain of about $1.7billion after taxes and satisfaction of sales-related obligationswill be used to reduce the cost of ComEd’s nuclear-related assets,currently valued at more than $9 billion. “This will provide a morecompetitive balance sheet as we make a transition to an open marketfor the generation and sale of electricity, as mandated by the 1997Illinois Restructuring Act,” Rowe said.

Some sale proceeds will enhance ComEd’s transmission anddistribution (T&D) system. “We expect to spend close to $4billion over the next five years on T&D to ensure our customershave a first-class delivery system,” Rowe said. Proceeds also willbe used along with normal operating revenues to support thecompany’s continuing improvement of its nuclear fleet and toprovide a foundation for growth in other business opportunities.

After the sale, ComEd will retain power purchase agreements withEdison Mission Energy enabling it to access output of the plantsfor the next five years to serve its customers. In addition, EdisonMission Energy will have substantial incentives to improve thereliability of the plants in the form of increased payments forbetter performance, especially in the high-demand summer months.

Headquartered in Rosemead, CA, Edison International subsidiaryEdison Mission yesterday also paid $650 million for a 40% stake ina New Zealand state-owned electricity and gas company calledContact Energy. The price is a hefty premium relative to analystexpectations.

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