AEP to purchase Lawrenceburg Generating Station from PSEG
COLUMBUS, Ohio, Jan. 2, 2007 – American Electric Power (NYSE: AEP) announced today that its AEP Generating Co. subsidiary has agreed to purchase the Lawrenceburg Generating Station from an affiliate of Public Service Enterprise Group (NYSE: PEG) for approximately $325 million.
The transaction is contingent on the receipt of required regulatory approvals from the Federal Energy Regulatory Commission (FERC) and Indiana Utility Regulatory Commission. It also requires federal clearance pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close in the second quarter of 2007.
The Lawrenceburg plant, adjacent to AEP’s Tanners Creek Plant in Lawrenceburg, Ind., is a combined-cycle, natural-gas power plant with a generating capacity of 1,096 megawatts. The plant began commercial operation in June 2004.
“The purchase of the Lawrenceburg plant will provide additional generating capacity to meet the growing electricity demands of our customers at an attractive price,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. "To meet an annual 2 percent growth in peak electricity demand in our eastern seven-state footprint and our reserve margin requirement in the PJM Interconnection, we must build new plants, like our Integrated Gasification Combined Cycle (IGCC) clean-coal generation projects in Ohio and West Virginia, and also seek opportunities to acquire recently completed gas-fired plants when the price is right. When the Lawrenceburg purchase is complete, we will have successfully added more than 2,900 megawatts of new natural gas-fired capacity to our generation fleet in two years at a significant discount to building equivalent capacity.
“The IGCC plants and our existing fleet of coal-fired plants in our eastern seven states will continue to supply the bulk of our customers’ demand and energy requirements on a daily basis,” Morris said. “The Lawrenceburg plant, along with the Darby acquisition announced in November 2006, and the Waterford and Ceredo plants purchased in 2005, will operate as mid-merit and peaking generation, designed for use when electricity demand is higher than average.”
When the transaction closes, AEP Generating Co. will own the Lawrenceburg plant, and AEP will operate the plant as part of the company’s generation pool that provides power to AEP’s utility units serving customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West Virginia.
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 36,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). The company is based in Columbus, Ohio.
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This report made by AEP and certain of its subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its registrant subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; the ability to recover regulatory assets and stranded costs in connection with deregulation; the ability to build or require generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; the ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP´s ability to constrain its operation and maintenance costs; AEP´s ability to sell assets at acceptable prices and on other acceptable terms; the economic climate and growth in AEP´s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP´s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas, and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; changes in the financial markets, particularly those affecting the availability of capital and AEP´s ability to refinance existing debt at attractive rates; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, and other energy-related commodities; changes in utility regulation, including implementation of EPACT and membership in and integration into regional transmission structures; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP´s pension and other postretirement benefit plans; prices for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation, and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.
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