Allegheny Energy Supply LLC is in the process of adding 1,710 MWto its generation portfolio, the company announced last week. Itsunregulated subsidiary has entered into a definitive agreement withEnron North America to acquire three gas-fired generating plants inthe Midwest for an undisclosed amount.

The plants, which have been in service since June 2000, includethe 546 MW Gleason plant in Gleason, TN, the 508 MW Wheatland plantlocated in Wheatland, IN, and the 656 MW Lincoln Energy Centerplant in Manhattan, IL. The facilities will give Allegheny Energynew generating capacity in the East Central Area Reliability region(ECAR), the Mid-America Interconnected Network (MAIN) and theSoutheastern Electric Reliability Council (SERC).

“Today’s announcement of our purchase of Enron’s Midwestgenerating assets is a pivotal step in our plan to transform from aregional generating company to a national energy supplier,” saidAlan J. Noia, CEO of Allegheny Energy. “The acquisition of Enron’snew, efficient natural gas-fired assets, along with other recentlyannounced generation projects and acquisitions, positions AlleghenyEnergy in areas of the country with growing demand for energy.”

The Hagerstown, MD-based company said it plans on financing thepurchase through a mix of debt and equity and expects the assets tobe accretive on its earnings in 2001.

“Allegheny has had a strategic growth strategy to double ourgeneration capacity within the next five years,” said spokeswomanJanice Lantz. “This is part of our plan to expand into markets thatwe have researched and determined would be good competitive marketsfor us to be in.”

An Enron spokesman said that this transaction does not signifyan exit from the electric generation market in the Midwest, citingexisting or planned generation facilities the company has inTennessee and Illinois.

“From our vantage point, we certainly are one of the leadersinto the peaking plant market,” said Enron spokesman Eric Thode.”We still have a number of others [plants] and are developing someothers as well. So, it is not like this is an exit from the peakingplant market. At this point in time, we believe that in thoseparticular areas there is a good amount of supply, the market isfairly liquid, and we don’t feel like we need to hold thoseparticular assets to continue to do the things that we do in thosemarkets. They made an offer that was good, so we took it.”

The companies expect to have regulatory approvals by the secondquarter of 2001.

The transaction is the latest addition to the electric portfolioof Allegheny Energy. The company previously announced theconstruction of a $540 million, 1,080 MW gas-fired plant in La PazCounty, AZ, and the purchase of 83 MW from the Conemaugh generatingfacility in Pennsylvania. The company also expects to build a 540MW gas-fired plant in Springdale, PA, and another 220 MW of peakingcapacity is in construction in Pennsylvania.

Alex Steis

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