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Reliant Scraps Plans To Sell LDC, Pipe Assets

Reliant Scraps Plans To Sell LDC, Pipe Assets

Houston-based Reliant Energy has shelved plans to potentially sell its natural gas distribution businesses and its interstate pipeline companies "at least for the near term," said a company spokesman.

Following a three-month evaluation period, the company announced last week that it would retain its distribution assets Reliant Energy Arkla and Reliant Energy Minnegasco, and the Reliant Energy Interstate Pipeline Group. The latter group includes Reliant Energy Gas Transmission and Mississippi River Transmission Corp. Reliant also considered selling its Energy Field Services group, but decided otherwise.

Reliant Energy, however, would not rule out the possibility of selling the assets in the future. "I don't think we foresee the sale of those assets anytime soon. But I can't give you a firm 'yes' or 'no' on that. We are leaving a small option open," said company spokesman Sandy Fruhman.

Although "there was interest expressed in some or all of the assets" by potential buyers, Fruhman said the detailed evaluation conducted by Reliant Energy revealed the unfavorable effects of such a sale. For example, she noted the company would have incurred a "substantial tax liability" if it had sold the assets outright.

"We never have said definitively that we were going to sell those divisions," she noted. After "looking at the overall big picture, we decided that selling those assets was not the best option for the company in the near term."

Reliant Energy began evaluating the potential sale of its gas distribution and pipeline properties in March as part of its effort to re-position the company as a growth company. In the end, it concluded there were "better options to achieve our growth strategy," said Reliant Chairman and President R. Steve Letbetter.

"We're a company that's in transition" from a regulated utility to a growth-oriented company, said Fruhman. Reliant's focus is on expanding its growth businesses, such as wholesale energy trading and marketing, and power generation.

Reliant Energy is ranked among the top five in U.S. wholesale electricity and natural gas trading and marketing. It also has more than 26,000 MW of power generation in operation in the U.S. and western Europe, and has announced acquisitions and development projects that will add nearly 6,000 MW.

Reliant Energy said it was continuing to pursue its previously announced plan to divest its minority interests in electric distribution assets in Latin America. But there was "nothing definitive" to report on potential buyers, Fruhman said.

Susan Parker

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