Allegheny to Acquire 3 Midwest Power Facilities From Enron
Allegheny Energy Supply LLC is in the process of adding 1,710 MW to its generation portfolio, the company announced last week. Its unregulated subsidiary has entered into a definitive agreement with Enron North America to acquire three gas-fired generating plants in the Midwest for an undisclosed amount.
The plants, which have been in service since June 2000, include the 546 MW Gleason plant in Gleason, TN, the 508 MW Wheatland plant located in Wheatland, IN, and the 656 MW Lincoln Energy Center plant in Manhattan, IL. The facilities will give Allegheny Energy new generating capacity in the East Central Area Reliability region (ECAR), the Mid-America Interconnected Network (MAIN) and the Southeastern Electric Reliability Council (SERC).
"Today's announcement of our purchase of Enron's Midwest generating assets is a pivotal step in our plan to transform from a regional generating company to a national energy supplier," said Alan J. Noia, CEO of Allegheny Energy. "The acquisition of Enron's new, efficient natural gas-fired assets, along with other recently announced generation projects and acquisitions, positions Allegheny Energy in areas of the country with growing demand for energy."
The Hagerstown, MD-based company said it plans on financing the purchase through a mix of debt and equity and expects the assets to be accretive on its earnings in 2001.
"Allegheny has had a strategic growth strategy to double our generation capacity within the next five years," said spokeswoman Janice Lantz. "This is part of our plan to expand into markets that we have researched and determined would be good competitive markets for us to be in."
An Enron spokesman said that this transaction does not signify an exit from the electric generation market in the Midwest, citing existing or planned generation facilities the company has in Tennessee and Illinois.
"From our vantage point, we certainly are one of the leaders into the peaking plant market," said Enron spokesman Eric Thode. "We still have a number of others [plants] and are developing some others as well. So, it is not like this is an exit from the peaking plant market. At this point in time, we believe that in those particular areas there is a good amount of supply, the market is fairly liquid, and we don't feel like we need to hold those particular assets to continue to do the things that we do in those markets. They made an offer that was good, so we took it."
The companies expect to have regulatory approvals by the second quarter of 2001.
The transaction is the latest addition to the electric portfolio of Allegheny Energy. The company previously announced the construction of a $540 million, 1,080 MW gas-fired plant in La Paz County, AZ, and the purchase of 83 MW from the Conemaugh generating facility in Pennsylvania. The company also expects to build a 540 MW gas-fired plant in Springdale, PA, and another 220 MW of peaking capacity is in construction in Pennsylvania.
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