Dominion to buy Millstone nuclear plant
Dominion Resources Inc., Richmond, Va., said it has reached an agreement to purchase the Millstone nuclear power station near New London, Conn., for about $1.3 billion cash from Northeast Utilities. The purchase price for the three-unit station includes approximately $105 million for nuclear fuel. Dominion reported it expects the transaction to close by April 2001.
Dominion Resources Inc., Richmond, Va., said it has reached an agreement to purchase the Millstone nuclear power station near New London, Conn., for about $1.3 billion cash from Northeast Utilities and will expand its reach into the Northeast.
The purchase price for the three-unit station includes approximately $105 million for nuclear fuel. Dominion said it expects to use a bridge facility for the initial financing and a combination of debt, equity, and possible asset sales for permanent financing.
Dominion, which operates the 1,,800 Mw North Anna nuclear power plant and the 1,600 Mw Surry nuclear station in Virginia, expects the acquisition to immediately add about 5�/share in the first and second year of ownership, and to accelerate in the beginning of the third year.
Dominion Chairman Thos. E. Capps said the acquisition will boost the company's electric generation capacity about 10% with the addition of about 2,000 Mw to an existing portfolio of 20,000 Mw. He said it also supports the company's strategy of becoming a major energy provider in the Northeast, Midwest, and Mid-Atlantic regions. These areas account for about 40% of US electricity demand.
"By adding Millstone to our diverse portfolio of generating assets, we're positioned to increase our market share in New England significantly," he said. "And we'll also gain desirable geographic diversity by operating an energy center in a region with dual summer and winter peaks for power."
Under the New England Independent System Operator rules Dominion will have flexibility to sell station output utilizing a mix of long-term and short-term contracts and will also be able to sell into the New England power pool spot market, Capps said.
Dominion played a key role from 1996 until 1999 in helping to restart Millstone, he said, and is very familiar with its operations.
Subsidiaries of Northeast Utilities own 100% of Millstone Unit 2, an 870 Mw pressurized water reactor, and 68% of Unit 3, a 1,150 Mw pressurized water reactor that has several other partial owners. Dominion will acquire 100% ownership of Unit 2. It will acquire 93.47% ownership of Unit 3, consisting of all of Northeast Utilities's 68% interest and 25.5% owned by other entities.
The sale will also include Millstone Unit 1, a 660 Mw boiling water reactor which was retired in July 1998, and is currently being prepared for future decommissioning.
Regulatory approvals are required by the US Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, the Federal Trade Commission or the Department of Justice, the Connecticut Department of Public Utility Control, and other state public utility commissions where additional owners of minority portions of the station are headquartered.
Dominion reported it expects the transaction to close by April 2001. Under the agreement, each Millstone employee will be offered 1 year of employment at the time of closing.