Edison Buying ComEd Fossil Plants for $5 B
Commonwealth Edison (ComEd) parent Unicom received about $1.76
billion over book value last week in the largest divestiture yet of
a utility's fossil-fueled power plants. Edison International's
independent power subsidiary is buying 9,772 MW of ComEd's coal-
and gas-fired baseload and peaking plants for $5 billion.
The deal will give Edison Mission Energy a huge foothold in one
of the nation's most "attractive" power markets - the Midwest,
where generation fuel will become increasingly more abundant in the
next few years and power sales are likely to continue capturing a
large premium during the hot summer months. Edison also has
committed to build another 500 MW of gas-fired generating capacity
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
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.
The sale still must pass state and federal regulatory approvals.
Joe Fisher, Houston
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