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Southern Closes on O&R Generation Purchase

Southern Closes on O&R Generation Purchase

Southern Energy New York closed a previously announced $480 million, 1,776 MW purchase of all Orange and Rockland (O&R) Utilities' generation assets Thursday. At the same time the deal closed the Southern Energy subsidiary, which was created with the sole intention of operating these newly-acquired assets, wasted no time in proposing a $390 million, 710 MW expansion to the Bowline Point Generation Station in Haverstraw, NY.

The Bowline Point facility, which is one-third owned by O&R and two-thirds owned (800 MW) by Con Edison, is the prize in the transaction. The 1,200 MW power plant delivers electricity straight into the New York power grid. It uses 300 MMcf/d of gas and the Millennium Pipeline project filed a plan last April to build an extension to the facility (See Daily GPI, April 9). "We've already approached the $1000 MWh mark once this summer, so the potential is there," said David Mould, a Southern Energy spokesman. "I won't pretend to be a forecaster of weather or price spikes, but we think we've gotten into a profitable position." For its share of the Bowline facility, Con Edison will receive $133.2 million.

Other stations included in the sale are the Lovett Generating Station in Stony Point, NY, the Hillburn and Shoemaker gas turbines in Hillburn and Middletown, NY respectively, and the Mongaup, Rio, Swing Bridge and Grahamsville hydroelectric facilities in Sullivan County, NY.

The 1,776 MW sale effectively exits O&R from all generation facility ownership in the state of New York. "This sale is a major step in the development of a wholesale energy market within New York State," said O&R CEO D. Louis Peoples. The divestment was held as part of the state public service commission's 1997 plan for electric restructuring, which requires all the state utilities to divest their generation assets.

Mike Donovan, an O&R spokesman, said only minimal turnover has resulted from the sale. Southern agreed to honor all union contracts.

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