Conectiv is selling 1,875 MW of fossil-fired generation andrelated assets that are owned by its subsidiaries, Atlantic CityElectric Co. and Delmarva Power & Light, to NRG Energy ofMinneapolis, a subsidiary of Northern States Power, for $800million. The deal includes a power sales contract at closing, inwhich Delmarva will buy 500 MW from NRG.

“These stations provide NRG Energy with a strong presence in thePJM market, plus excellent opportunities for sales to adjacentmarkets,” said Craig Mataczynski, NRG North America CEO. “Thepurchase also reinforces NRG Energy’s overall position in theNortheast, providing additional dispatching flexibility andopportunities for sales of ancillary services when that marketdevelops in PJM.” The Conectiv purchase adds to NRG Energy’sexisting holdings in the Northeast, which consist of over 4,500 MWof generating capacity in the New York Power Pool and nearly 2,500MW in the New England Power Pool.

For Conectiv, the deal moves it closer to achieving its goal ofexiting baseload and nuclear generation and focusing on moregrowth-oriented areas of the energy markets, said Howard E.Cosgrove, Conectiv CEO. Specifically, the sale reflects Conectiv’spreviously announced business strategy to concentrate on the “midmerit” segment of the generation industry. The mid-merit market iscomposed of power plants that can come on line quickly and produceelectricity when demand is high, then turn off quickly when demanddrops. Conectiv continues to own about 2,000 MW of “mid-merit” andpeaking capacity with an additional 650 MW of generation expectedto be phased into service over the next few years. In addition, themajority of the Conectiv units can use multiple fuels, which can beselected for use based on price and availability. Concentrating onsuch flexible power plants is expected to give Conectiv acompetitive advantage in this niche segment of the burgeoningwholesale power market.

Last year, the company also announced that it has entered intoagreements for the sale of its interests in nuclear generatingfacilities, substantially eliminating all of its nuclear liability.

Conectiv is also evaluating other opportunities to add capacityin the regional merchant generation market, Cosgrove said. It willuse proceeds from the sale for debt repayment, repurchases ofcommon stock and new investments, including further expanding itsgeneration business.

The generating facilities in the sale include, B.L. England, a447 MW coal- and oil-fired facility in Cape May County, NJ;Deepwater, a 239 MW coal-, oil-, and gas-fired station in SalemCounty, NJ; Indian River, a 784 MW coal-and oil-fired stationlocated in Sussex County, DE; Vienna Station, a 170 MW oil-firedfacility located in Vienna, MD; a 6.17% interest (106 MW) in thecoal-fired Keystone Station in Shelocta, PA; and a 7.55% interest(129 MW) in the coal-fired Conemaugh Station located in NewFlorence, PA. The sale is expected to close in the third quarter.

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