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WPS Finds Buyer for Power Plant: Green Bay Utility to Sell Facility in Pennsylvania for $30.4 Million

Posted on: Wednesday, 14 June 2006, 03:00 CDT

By Thomas Content, Milwaukee Journal Sentinel

Jun. 14--WPS Resources Corp. (WPS) of Green Bay said it plans to sell a coal-fired power plant in Pennsylvania for $30.4 million. The sale will generate $12 million in cash tax benefits that WPS expects to realize over the next one to four years.

The sale of the 421.7-megawatt Sunbury power plant will result in a pretax gain of about $20 million, the Green Bay utility holding company said. The sale is subject to Federal Energy Regulatory Commission approval and the buyer's obtaining financing.

The announcement came a year after WPS sold emission allowances relating to Sunbury for nearly $110 million.

In addition to proceeds from the transaction, the sale is expected to generate about $12 million in cash tax benefits that will be realized over the next one to four years, depending on the use of alternative minimum tax credits, the company said. WPS Energy Services, the company's non-regulated subsidiary, has been evaluating Sunbury's future since 2004, when a proposed sale of the plant to Pittsburgh's Duquesne Light Co. for $120 million fell through.

WPS bought the plant in 1999 for $106 million, at a time when Pennsylvania and nearby states were opening up their electric power markets to competition and WPS was expanding in the non-regulated business. WPS remains active in selling power in non-regulated states but has sold off some of the power plants it bought in competitive markets.

"The sale of the facility will allow us to better focus on our existing competitive energy business while continuing to evaluate other opportunities to add to and optimize our non-regulated generation fleet," said Mark Radtke, president of WPS Energy Services, in a statement.

Plant hurt earnings

Sunbury was a drag on WPS earnings until the company decided last year to run the plant only part time, in the summer months when power prices were higher. But the company's decision to run the plant part time was difficult for plant employees, 93 of whom are members of International Brotherhood of Electrical Workers Local 1600.

The union workers have been working under the terms of a contract that expired in May 2005, and WPS declared an impasse in contract talks earlier this year. As part of the deal announced Tuesday, Corona Power LLC has already negotiated a new contract with the IBEW, and Corona plans to run the plant 12 months a year, said Joe O'Leary, WPS senior vice president and chief financial officer.

Little information was available Tuesday about the buyer, Corona. The Pennsylvania limited liability corporation was formed in December, according to state records.

Neil W. Hedrick, Corona president, said in a statement that the Sunbury purchase "is a natural outgrowth of our fuels- and trucking-related business."

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Copyright (c) 2006, Milwaukee Journal Sentinel

Distributed by Knight Ridder/Tribune Business News.

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NYSE:WPS, NYSE:DQE,

Source: The Milwaukee Journal Sentinel

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