Seven Power Plants Sold to Banks
NEW YORK -- - Exelon Corp. said it plans to turn over four old generators at the 1,000 megawatt Mystic power plant near Boston to its bankers in addition to three other Massachusetts units to avoid repaying $1.1 billion in debt.
Chicago-based Exelon announced recently that it would turn over two recently completed 800 MW units at Mystic, 8 and 9, and the new 800 MW Fore River plant to a consortium of banks led by Paris-based BNP Paribas which financed their construction.
Together the plants total about 3,400 MW of generating capacity, enough to power about 3.4 million homes.
Diane Applegate of Exelon's Exelon Generation subsidiary told Reuters on Tuesday the company always planned on including the Mystic units 4-7 in the transfer.
After borrowing $1.1 billion to finance the construction of Mystic 8 and 9 and Fore River, Exelon decided to give up its $700 million investment and ownership in the plants, citing construction delays, cost overruns and falling prices in the New England wholesale power market.
The move comes 10 months after Exelon bought full ownership in the plants in November by acquiring the remaining 50 percent stake in Sithe New England that it did not already own for $543 million in notes.
Exelon has said a default on the Mystic and Fore River loans would not constitute a default on its other debts.
The company, however, has said the transfer would result in Exelon Generating having to write off about $550 million in assets after income taxes.
Exelon, which is still in talks with the lenders, said it expects to keep running the plants until the transfer to the banks is completed.
Exelon in May asked the New England power grid operator, ISO New England, for permission to shut Mystic units 4-6 because they required costly upgrades to be competitive.
The plants, built between 1957 and 1961, burn oil to generate electricity.
The 600 MW Mystic 7, built in 1975, is capable of burning both natural gas and oil.
The gas-fired Mystic 8 and 9 entered service in April and June, respectively, while Fore River, which burns both gas and oil, just started producing electricity commercially in July.
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