PG&E delays power plant transfers until August

NEW YORK -- - PG&E Corp.'s cash-strapped National Energy Group unit said recently the transfer of four power plants to a group of lenders led by French bank Societe Generale has been postponed to the end of August.

The transfer, originally scheduled for March 31 before being delayed to June 30, was delayed again "to allow more time to complete a very complicated transaction," said NEG spokeswoman Kristine Schettini. She said it is possible Societe Generale will extend the transfer date again to Sept. 30.

NEG must turn the 360 megawatt (MW) Millenium plant in Massachusetts, the 1,080 MW Athens plant in New York, the 1,170 MW Covert plant in Michigan and the 1,092 MW Harquahala plant in Arizona over to Societe Generale to avoid default on the loans used to build and operate the plants.

Together, the four plants will be able to generate enough electricity for about 3.7 million homes.

Three of the plants -- Athens, Covert and Harquahala -- are in the final stages of construction. Millenium has been operating since 2001.

At Athens, for example, all three units have been test fired, and the plant is expected to be operating commercially sometime during the third quarter, Schettini said.

Last month, NEG also delayed the transfer of two other plants -- the 1,121 MW La Paloma plant in California and the 840 Lake Road plant in Connecticut -- to Citigroup Inc.'s Citibank unit from June 9 to Sept. 30.

NEG, based in Bethesda, Maryland, defaulted on several credit lines this year and has struggled to stay afloat since its debt was downgraded to "junk" status nearly a year ago.

In May, NEG's parent, PG&E Corp. of San Francisco, said it expected to restructure the subsidiary through a Chapter 11 bankruptcy filing. PG&E Corp. is also the parent of the bankrupt Pacific Gas and Electric Co. utility in Northern California.

PG&E National Energy Group operates more than 7,400 MW of generation around the country and more than 1,300 miles of natural gas pipeline.