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Dominion to buy Millstone nuke for $1.3 bln
Dominion to buy Millstone nuke for $1.3 bln
NEW YORK, Aug 7 (Reuters) - Power provider Dominion
Resources Inc. <D.N> on Monday said it agreed to buy Northeast
Utilities Inc.'s <NU.N> Millstone nuclear station for $1.3 billion in
cash to expand its reach in the New England power market.
The deal also ends Northeast's efforts to shed the station, which it
put up for auction in April. The three-unit station on the Long Island
Sound near New London, Conn., is New England's largest
electrical generating plant. Its checkered history includes charges
of pollution, retaliation against whistle-blowers and extended power
outages that cost Northeast Utilities as much as $1 billion in power
replacement costs associated with shutdowns in the mid-1990s.
The Connecticut Department of Public Utility Control in April hired
J.P. Morgan to conduct an auction of the Millstone nuclear power
station.
Richmond, Va.-based Dominion said it expects Millstone to add 5
cents per share to earnings in the first and second year of
ownership. Dominion said it expects the deal to close by April
2001 and said the purchase includes $105 million for nuclear fuel.
"This acquisition supports our broader corporate strategy to
become a major energy provider of choice in the Northeast,
Midwest and Mid-Atlantic regions, home to 40 percent of the
nation's demand for energy," said Chief Executive Thomas Capps
in a statement.
"By adding Millstone to our diverse portfolio of generating assets,
we're positioned to increase our market share in New England
significantly."
Dominion shares closed up 1 at 50-5/8 ahead of the news in
trading on the New York Stock Exchange. Northeast shares closed
up 1/4 at 23 on the NYSE. Dominion said it will ultimately finance
the deal with a combination of debt, equity and perhaps asset
sales.
Subsidiaries of NU own 100 percent of Millstone Unit 2, an 870-
megawatt nuclear reactor and 68 percent of Millstone Unit 3, a
1,150-megawatt reactor that has several other partial owners.
The sale also will include Millstone Unit 1, a 660-megawatt reactor
that was retired in July 1998 and is currently being placed in safe
storage for future decommissioning.
The 1970s energy crisis spurred NU to build the Millstone units.
But by the 1980s, construction delays raised the cost of the final
unit, Millstone 3.
The 1995 shutdown of Millstone 1 began NU's nuclear troubles. In
1996 regulators closed all of NU's nuclear operations, except the
Seabrook nuclear plant in New Hampshire, because of safety
concerns.
Current NU Chairman Michael Morris was brought in to fix the
company's troubled nuclear plants. He replaced Bernard Fox, who
left after federal regulators ordered NU to comply with regulations
and fix management problems. NU managers had routinely
retaliated against whistle-blowers
NU received permission to restart the Millstone units in 1998 and
1999. But it had to absorb the $1 billion in power replacement
costs associated with extended shutdowns.
In 1999, NU agreed to plead guilty to 25 federal felony counts and
pay $10 million in penalties for polluting water near Millstone and
lying to regulators. Consolidated Edison agreed to buy NU for $3.3
billion in cash and stock and $3.9 billion in assumed debt.
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