Edison International Buying ComEd Power Plants for $5 B
Edison International's wholly-owned independent power subsidiary
will acquire all the fossil-fuel generating assets of Commonwealth
Edison. The company will pay about $5 billion for a package of coal
and gas-fired plants with total capacity of 9,772 megawatts (MW).
Edison Mission Energy has also committed to build 500 MW of
gas-fired generating capacity in Chicago.
John E. Bryson, CEO of Edison International, parent of Southern
California Edison, said the plants have excellent access to
attractive markets in the Midwest and will continue to serve
northern Illinois. "These assets represent some of the most
competitive generation in the region. The acquisition complements
the recent acquisition of the Homer City Generating station in the
Mid-Atlantic region, giving us a strong generation presence across
the United States."
The sale properties include six coal-fired plants that together
have 5,645 MW of capacity, and Collins Station in Morris, IL, which
has 2,698 MW of capacity and runs on natural gas or oil. The nine
peaking units to be sold have a combined capacity of 1,429 MW, are
fueled by either gas or oil and are located at nine ComEd sites in
Chicago (three locations), Waukegan, Joliet, Lombard, Rockford,
Eola, and South Chicago Heights. The plants range in age from 21 to
47 years old; most having been built in the late 1950s and early
ComEd parent Unicom got about $1.76 billion over book value for
the plants combined. The sale will enable Unicom to improve its
financial structure and redirect investments, said Unicom and
Commonwealth Edison CEO John W. Rowe. The gain of about $1.7
billion after taxes and satisfaction of sales-related obligations
will be used to reduce the cost of ComEd's nuclear-related assets,
currently valued at more than $9 billion. "This will provide a more
competitive balance sheet as we make a transition to an open market
for the generation and sale of electricity, as mandated by the 1997
Illinois Restructuring Act," Rowe said.
Some sale proceeds will enhance ComEd's transmission and
distribution (T&D) system. "We expect to spend close to $4
billion over the next five years on T&D to ensure our customers
have a first-class delivery system," Rowe said. Proceeds also will
be used along with normal operating revenues to support the
company's continuing improvement of its nuclear fleet and to
provide a foundation for growth in other business opportunities.
After the sale, ComEd will retain power purchase agreements with
Edison Mission Energy enabling it to access output of the plants
for the next five years to serve its customers. In addition, Edison
Mission Energy will have substantial incentives to improve the
reliability of the plants in the form of increased payments for
better performance, especially in the high-demand summer months.
Headquartered in Rosemead, CA, Edison International subsidiary
Edison Mission yesterday also paid $650 million for a 40% stake in
a New Zealand state-owned electricity and gas company called
Contact Energy. The price is a hefty premium relative to analyst
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.