The New York Public Service Commission (PSC) approved New YorkState Electric and Gas Co.’s (NYSEG) sale of all of itsfossil-fueled generation plants to AES NY Inc. and Mission EnergyWestside Inc. The $1.85 billion sale furthers the commission goalof encouraging utility divestiture of generation facilities as onestep in the process of introducing competition to New York’selectric industry. NYSEG is the first utility in the state toreceive commission approval for the sale of generation facilities.

About $400 million in excess sale proceeds will be used toreduce NYSEG’s original investment in the Nine Mile 2 nuclear plant- its capital costs. The commission said the company must reflectthe $400 million reduction of its rate base in its annualcalculation of earnings, subject to the 12% annual earnings cap setby the commission under the current plan, with any over-earningsbeing returned to ratepayers. Reducing the company’s rate base by$400 million will result in a smaller revenue requirement the nexttime the commission considers NYSEG rates after the current rateplan expires in 2003.

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