Exelon to buy two power plants from TXU for $443 million

By the OGJ Online Staff

HOUSTON, Dec. 21 A unit of Exelon Corp. said it agreed to buy two Texas power plants with combined generating capacity of 2,334 Mw from TXU Corp. for $443 million.

Exelon, Kennett Square, Pa., said the transaction will give its unregulated unit Exelon Generation Co., an increased foothold in the deregulating Texas market, improve its geographic diversity, and give it an opportunity to expand beyond Texas. State law opens the door to deregulation Jan. 1.

Included in the purchase are the 893 Mw Mountain Creek steam electric station in Dallas and the 1,441-Mw Handley Steam electric station in Fort Worth. Exelon Power this summer began operating the new 165 Mw combustion turbine ExTex LaPorte plant in LaPorte, near Houston.

Exelon entered the Electric Reliability Council of Texas market in October 2000, when the Tenaska Frontier plant was completed and Exelon Power Team began marketing the 830 Mw of output. Exelon Power Team also markets 350 Mw of output from the Wolf Hollow plant in Hood County.

Exelon Power Pres. Christine Jacobs said the acquisition from TXU represents a good fit with Exelon�s plan to grow its portfolio of generation assets. The transaction is expected to immediately add to earnings, she said, and triples the amount of Exelon-owned generation in the region, allowing the company to become a more effective competitor.

The plants will be operated by Exelon Power, Exelon Generation�s power plant operation arm. The output will be marketed by Exelon Power Team, Exelon�s wholesale marketing operation. The transaction includes a purchase power and tolling agreement for TXU Energy to purchase power during summer months for the next 5 years. The transaction is expected to be completed in 2002.

Lehman Brothers energy analyst Daniel Ford Friday said he expected the purchase to add modestly to Exelon's earnings. His 2002 estimate of $4.65/share was left unchanged.

Ford lowered his estimate of Exelon's 2001 earnings per share by 15� to $4.24/share, citing poor weather and lower power prices. He blamed warmer weather in Exelon's Philadelphia and Chicago markets and said nuclear results will not be as good due to planned outages.

"We believe an economic recovery is key to the Exelon story, which is highly leveraged to power prices," Ford said.

TXU Energy Group Pres. Brian Dickie said the sale will reduce debt and decreases the company's size in the Texas market.

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