PPL Corp. will conduct a sales process for its natural gas distribution business, PPL Gas Utilities Corp., and propane business, Penn Fuel Propane, the company said Monday. These businesses represented about 1% of PPL’s overall earnings from ongoing operations in 2006.
The gas utility serves about 77,000 distribution customers in 34 counties throughout Pennsylvania and a small area of Maryland. It operates about 3,800 miles of pipeline and owns underground gas storage capacity in three separate reservoirs in north-central Pennsylvania. The propane subsidiary buys propane on a wholesale basis and stores, delivers and sells it to about 34,000 industrial, commercial and residential customers in Pennsylvania, Delaware, Maryland and West Virginia.
“Although these businesses have been operationally and financially successful, their relative size and earnings contributions limit their strategic value to PPL’s future growth,” said PPL COO William H. Spence. “We believe the capital investments necessary to maintain and expand these businesses would be better devoted to our core electricity supply and delivery businesses.”
PPL Corp. was ranked among the top gas utilities for customer satisfaction earlier this year by the American Customer Satisfaction Index (see Daily GPI, May 17).
Allentown, PA-based PPL expects the sale to be completed during the second half of 2008.
The company is currently analyzing whether its decision to move forward with a sale of these businesses will result in a special item adjustment for the third quarter of 2007. Any special item resulting from this decision to sell these businesses would not affect PPL’s 2007 forecast of earnings from ongoing operations.
So far this year, the company has completed the sales of its electricity delivery businesses in El Salvador and Bolivia and has reached a definitive agreement to sell its telecommunications operations. In addition, PPL expects to complete the sale of its Chilean electricity delivery business by the end of 2007.
“These steps position us to focus on emerging growth opportunities in our core businesses of electricity generation, marketing and delivery…” Spence said.
PPL has retained Lehman Brothers as its financial advisor in the sales process.
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