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Duke Energy to Sell All Plants Outside Midwest in $1.5B Deal Veazie's Maine Independence Station Included

Posted on: Tuesday, 10 January 2006, 18:00 CST

By FROM STAFF AND WIRE REPORTS

CHARLOTTE, N.C. - Following through on a pledge to shed most of its merchant power plants, Duke Energy Corp. said Monday it will sell its North American wholesale power generation assets outside the Midwest for about $1.5 billion to a subsidiary of LS Power Equity Partners.

The deal has a minimum value of $1.48 billion, though it could rise to $1.54 billion if certain performance measures are met, the Charlotte-based energy company said.

After the announcement, shares of Duke Energy rose 8 cents to $27.87 on the New York Stock Exchange.

Duke Energy said it expects a one-time, pretax gain of about $330 million from the sale of the Duke Energy North America power plants. The assets include about 6,200 megawatts of power generation located in the Western and Northeastern parts of the United States, the company said.

Being sold in the deal are the 520-megawatt Maine Independence Station in Veazie and the 490-megawatt Bridgeport Energy Project in Bridgeport, Conn., both of which are natural gas-fired, combined- cycle plants. The sale also includes two plants in Arizona and four in California.

"Completing the exit from DENA's business is a major objective for 2006," Paul Anderson, Duke Energy's chairman and chief executive, said in a statement. "This agreement to sell DENA's entire fleet outside the Midwest puts us well on our way only nine days into the year."

In September, Duke Energy took a large charge against third- quarter earnings for the planned sale of the merchant power assets.

Along with other U.S. power companies in the late 1990s, Duke Energy had moved aggressively into power and gas trading businesses that appeared to offer impressive opportunities. Enron Corp.'s failure in December 2001 threw the entire U.S. energy industry into a slump.

In 2002, Duke's investment in unregulated merchant power plants became a liability when demand dropped following a price spike for natural gas. The plants were designed to produce power for sale to utilities and big industrial users in California, the Northeast and the Midwest.

Duke Energy, which is in the process of acquiring rival Cinergy Corp. in a $9 billion deal, said in November it would transfer the unit's commercial portfolio of derivatives contracts to Barclays Capital, the investment banking division of British bank Barclays Bank PLC.

Source: Bangor Daily News

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