PSEG selling Indiana plant at a loss
Newark-based holding company Public Service Enterprise Group said that it has agreed to sell the Lawrenceburg Energy Center in Lawrenceburg, Ind., for $325 million to AEP Generating Co., a subsidiary of American Electric Power Co. Inc.
The 1096-megawatt, gas-fired electric plant, which opened in June 2004, is adjacent to another AEP power plant, the Tanners Creek Plant, also in Lawrenceburg.
"The purchase of the Lawrenceburg plant will provide additional generating capacity to meet the growing electricity demands of our customers at an attractive price," Michael G. Morris, AEP's chief executive officer, said in a statement.
PSEG spent about $640 million to construct the plant, but it operated at most about 20 percent of the time because increasing prices for natural gas made plants run on other fuels more economical, such as AEP's fleet of coal-fired plants. AEP said it only plans to operate the plant when electricity demand is above average.
Frank Cassidy, president and chief operating officer of PSEG Power, one of the country's biggest independent power producers, said the sale was the best move for PSEG shareholders and plant employees, given conditions in wholesale power markets.
The deal is PSEG's second recent discounted sale of a fairly new power plant to American Electric, following the May 2005 sale of PSEG's Waterford plant in Ohio for $220 million, less than half its construction cost.
The latest sale is expected to bring PSEG $425 million, including the price for the plant and an anticipated decrease in tax liability.
PSEG expects to take an after-tax charge of $210 million, or 83 cents per share, but affirmed its 2006 per-share operating earnings forecast of $3.45 to $3.75 for 2006.
The divestiture should add to operating earnings in 2007.
On the New York Stock Exchange, shares of PSEG rose 29 cents to close at $66.67; shares of AEP edged up 27 cents to finish at $42.85.
The sale is expected to close in the second quarter of this year, and requires approval by federal and state regulators.
Related News

European Power Hits Records as Plants Start to Buckle in Heat
BERLIN - Benchmark power prices in Europe hit fresh records Friday as utilities are increasingly reducing electricity output in western Europe because of the hot weather.
Next-year contracts in Germany and France, Europe’s biggest economies rose to new highs after Switzerland’s Axpo Holding AG announced curbs at one of its nuclear plants. Electricite de France SA is also reducing nuclear output because of cooling water restrictions, while Uniper SE in Germany is struggling to get enough coal up the river Rhine.
Europe is suffering its worst energy crunch in decades as gas cuts made by Russia in retaliation for sanctions drive a…