Columbia Energy Group is planning some significant investmentsin wholesale power generation and possibly foreign utilities andhas filed a request with the Securities and Exchange Commission toexpand its authority under the Public Utility Holding Companies Actto make such investments. Columbia told the commission it wants tobe able to invest an amount equal to 100% of its annual earnings.It currently is authorized to invest only 50% of its earnings insuch projects.

The company’s consolidated retained earnings were $550.9 millionas of June 30, making an investment equal to its earnings a”relatively small commitment of capital for a company the size ofColumbia, based on various key financial ratios” and less of acommitment than the SEC has authorized for other holding companies,such as Southern Co., Columbia said.

The request comes at a time when Columbia is actively examiningits options in order to avoid a $6.1 billion hostile takeover byNiSource. Columbia recently said it was considering allpossibilities, including a merger or sale of all or part of thecompany. But this SEC filing is intended to enable Columbia to gaina better foundation in the $200 billion U.S. electricity market,Columbia said.

“The increase in financing and investment authority will provideColumbia the flexibility necessary to respond in a timely fashionto possible investments. Certainty of execution is often importantin negotiating for an investment. In addition, lead-time forinvestments varies greatly. Sometimes the process of evaluating anddeveloping projects takes many months or years; other times theremay be only a few weeks from the date a company learns of aninvestment opportunity to the time the deal is completed.Furthermore, confidentiality concerns often exist that make itdifficult to seek commission approval,” the company told the SEC.

Columbia Electric has interests in three existing cogenerationprojects (250 MW) and is planning several others. The company hasentered into joint development agreements with Westcoast Energy todevelop three more gas-fired plants (1,000 MW) in the Northeast andMid-Atlantic regions of the U.S., and possibly Canada at a totalcost of $600 million to $700 million. In addition, in June, 1998,Columbia Electric and LG&E Power Inc. entered into an agreementto develop a 550 MW gas-fired cogeneration project in Gregory, TX,for a Reynolds Metals plant. It also has plans to build a 500 MWLiberty Electric Project in Eddystone, PA, a 50 MW Grassy PointEnergy Project in Haverstraw, NY, a 550 MW project in southernMaryland and a 500 MW project in the Midwest.

A combination of factors, “including economic growth, retirementof nuclear plants and the environmental issues faced by existingcoal and oil-fired generation, suggest that natural gas-firedcombined-cycle power plants will dominate the new-plant market forsome time to come,” Columbia told the SEC.

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