Electric Power news briefs, July 31
LG&E Energy � PowerGen � DTE Energy Technologies � Pratt & Whitney Canada � Turbo Genset � Oglethorpe Power ... Calpine Corp. ... Wisconsin Public Service Resources Corp. ... American Transmission Co. LLC ... Midwest ISO ... ScottishPower PLC ... PacifiCorp ... Cleco Corp.
LG&E Energy Corp. and PowerGen PLC said they expect their merger to close by yearend, pending completion of remaining regulatory approvals. LG&E said it received notice Friday that it has obtained clearance under the US Hart-Scott-Rodino Act. The transaction previously has been approved by the shareholders of both companies, the Kentucky Public Service Commission, the Virginia State Corporation Commission, and the US Federal Energy Regulatory Commission.
DTE Energy Technologies, an unregulated subsidiary of DTE Energy Co., reported signing an agreements with Pratt & Whitney Canada Corp. and Turbo Genset Co. Ltd., UK, for development of a 400 kw turbine generator. The companies said the energy|now turbine-generator is targeted for distributed generation applications for small to medium-sized commercial customers and micro grids serving both residential and commercial development projects. The turbine-generator will utilize Pratt & Whitney's industrial engine, much like a helicopter engine, as the core of the package. According to the companies, the engines will directly drive high-speed generator systems from Turbo Genset, which allow high performance and reliability at one-tenth the size and weight of conventional generators in this power range. Commercial units are expected to be available in early 2002.
LG&E Energy Corp. reported it plans to build up to 10 natural gas-fired combustion turbines to meet rising power demands in the US Midwest and Southeast. The turbines will be built in Kentucky to meet native load commitments of the company's two utilities, and in Georgia to mitigate its exposure related to its Oglethorpe Power Corp. contract and to capture value in a growing market, the company said. A company spokesman said the location and investment value are to be determined.
Standard & Poor's removed all of Calpine Corp.'s ratings from CreditWatch, it said. S&P placed Calpines ratings on CreditWatch June 26 pending analysis of the potential credit implications of the acquisitions of SkyGen Energy and Panda Energy assets. Calpine plans to recapitalize the company and fund its recent acquisition by issuing $800 million in senior unsecured debt, $450 million in convertible preferred securities, and $750 million in common stock, which will bring the total adjusted leverage to capitalization of the company to 65%. Standard & Poor's affirmed its double-'B'-plus corporate credit rating on Calpine Corp. and its double-'B'-plus rating on the company's $1.56 billion of senior unsecured debt. Standard & Poor's also affirmed its single-'B'-plus rating on Calpine's $636 million convertible preferred securities. In addition, Standard & Poor's today assigned its double-'B'-plus rating to Calpine's new $800 million senior unsecured notes and its single-'B'-plus rating on Calpine's new $450 million in convertible preferred securities. S&P said the ratings reflects the increased risk profile of the company as it pursues an extensive US merchant power plant development strategy. Cash flows exposed to market-based energy prices will increase from 60% in 2000 to 80% by 2004.
The Midwest Independent Transmission System Operator Inc. has approved the membership of three new applicants, Wisconsin Public Service Resources Corp., Green Bay, Wis.; American Transmission Co. LLC (ATC), Milwaukee; and Calpine Corp., San Jose, Calif. The Midwest ISO will assume functional control of the transmission assets of Wisconsin Public Service and ATC when MISO becomes operational in November. Calpine will join 22 other nontransmission-owning members of the ISO. With the addition of WPS and ATC, 16 transmission owners have signed the MISO agreement. When fully operational utilities with 52,000 miles of lines and 78,000 Mw of generation will be participating.
ScottishPower PLC said integration of its US subsidiary PacifiCorp has exceeded expectations. In May the company reported a transition plan to reduce operating costs by $300 million, to reduce capital expenditure by $250 million, and to cut manpower by 1,600 over a 5-year period. Implementation of the plan began immediately. The workforce has already been reduced and a further 740 individuals have applied to leave under early retirement arrangements, the company reported. At the same time, ScottishPower said investment in call centers has begun and customers have begun to benefit from service improvements.
Regional energy services company Cleco Corp., Pineville, La., reported it has adopted an antitakeover plan in the event of a hostile offer for the company. Terms of the plan provide for a dividend distribution of one right for each outstanding share of common stock to holders of record at the close of business on Aug. 14, 2000. The plan would be triggered if an acquiring party accumulates 15% or more of the company's common stock and would entitle holders of the rights to purchase either the company's stock or shares in an acquiring entity at half market value. The company would generally be entitled to redeem the rights at $0.01 per right at any time until the 10th day following the time the rights become exercisable. The rights will expire on July 30, 2010.