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
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
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.
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