El Paso Takes 50% Stake in CalEnergy Power Company
In an effort to smooth the way for FERC approval of its merger
with MidAmerican, CalEnergy sold a 50% stake in power generation
subsidiary CE Generation LLC to El Paso Energy last week for $259.6
million, including $236.1 million in cash and $23.5 million in debt
and other payments. CE Generation is the holding company for 14
U.S. power plants with capacity to produce 896 MW of electricity.
The transaction nearly triple's El Paso's power generation
capacity, which currently stands at about 300 MW (El Paso has
another 1,700 MW of gas-fired power plants planned for construction
in New England after 2000). The CE purchase also is expected to
contribute 10 cents/share in earnings for El Paso in 1999, a
spokeswoman said. El Paso earnings were $1.85/share in 1998 up from
$1.59 in 1997. The current Wall Street forecast on El Paso is for
12% earnings-per-share growth in 1999 and 2000 to $2.07/share and
The CE Generation power plants include 10 geothermal plants (two
under construction) near the Imperial Valley in Southern California
and four natural gas-fired cogeneration projects in New York,
Pennsylvania, Texas and Arizona.
The transaction is designed to enable CalEnergy to comply with
FERC's Dec. 17, 1998 ruling to ensure that power plants that are
PURPA qualifying facilities (QFs) maintain their status as QFs
following a merger.
Prior to closing, CalEnergy also expects to receive $395 million
in net proceeds from a $400 million debt issuance by CE Generation.
©Copyright 1999 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.