In keeping with its plan to merge with National Grid USA and focus on regulated energy transmission and distribution businesses, Niagara Mohawk Holdings Inc. on Tuesday sold its unregulated energy marketing and services subsidiary to Select Energy Inc., a subsidiary of Northeast Utilities. Terms of the sale of Niagara Mohawk Energy Marketing Inc., were not disclosed.

In a $3 billion deal, Niagara Mohawk and National Grid announced plans to merge in September 2000, and the Federal Energy Regulatory Commission approved it in June (see Daily GPI, Sept. 6, 2000; June 14). Niagara nearly declared bankruptcy in 1997 because of contracts mandated by the State of New York that forced the utility to buy electricity from independent power producers above market rates.

New York regulators then allowed Niagara to refinance or buy out nearly $6 billion of the contracts in 1998 and the company was restructured (see Daily GPI, Aug. 7, 1998). Niagara then began selling its power plants to concentrate on delivering electricity through its 24,000-square-mile transmission network, which is the largest in the State of New York.

Select Energy’s acquisition will significantly expand its business in New York and other areas as a result of Niagara Mohawk Energy Marketing’s profitable operations in wholesale energy, trading, retail energy and related services. The transaction is expected to be completed in November 2001, pending regulatory approval.

“Niagara Mohawk Energy Marketing’s customer base, energy portfolio and employee skills clearly are a strong and strategic fit for Select Energy. We are the leading competitive energy company headquartered in New England. And now we are fulfilling our plans to expand operations and assets throughout the entire northeastern United States,” said Select Energy President William W. Schivley.

Schivley noted that the majority of Niagara Mohawk Energy Marketing’s operations will continue to be based in Syracuse.

“Through this transaction, Niagara Mohawk Energy Marketing will be part of an organization with a similar strategic mission and the resources and commitment necessary to continue to grow and succeed,” said Albert Budney, president of Niagara Mohawk Holdings. “In addition, Niagara Mohawk Energy Marketing’s customers will benefit from the combined resources and expertise of the two companies.”

He said Niagara Mohawk Holdings is continuing to pursue the sale of Niagara Mohawk Energy’s other operating divisions: Niagara Mohawk Energy Services and Niagara Mohawk Distributed Power.

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