Utility Dominion to buy power plants in Virginia
The electric utility unit of Dominion Resources Inc. said it will pay about $49 million in cash to acquire a 310-megawatt, gas-fired generating plant in Chesapeake and an 80-megawatt, wood-burning facility in Hurt, which is in northern Pittsylvania County.
The company also will assume or pay off $148 million in long- term debt associated with the two facilities and their long-term power-purchase agreements.
Both deals are subject to state and federal regulatory approval. The acquisition in Hurt also requires consent from bondholders.
Jim Norvelle, a Dominion spokesman, said the two plants would provide enough electricity to supply about 97,500 homes.
Dominion, which is based in Richmond, is buying the Chesapeake facility from Chickahominy River Energy Corp., which is owned by NRG Energy Inc., and from James River Energy Co., a subsidiary of Dynegy Inc. The plant has three simple-cycle, combustion-turbine generators.
The Hurt facility, which has two wood-burning units, is owned by Multitrade of Pittsylvania County L.P.
Dominion said electricity generated by the two plants will continue to serve the company's customers in Virginia and North Carolina. The acquisitions, it added, are part of Dominion's effort to lower the cost of long-term power contracts with non-utility generators.
The power from both facilities was sold to Dominion under 25- year power-purchase contracts, which will be terminated when the deals close, probably in the fourth quarter of 2004.
Ending the contracts is expected to result in a $90 million to $110 million after-tax charge to Dominion's earnings.
The company said the acquisitions will not require Dominion to issue equity because proceeds have been bigger than expected from its customer stock-purchase program and from options exercised in conjunction with executive stock loan repayments.
Dominion can generate more than 24,000 megawatts of electricity. It serves 2.2 million electricity customers in Virginia and northeastern North Carolina.
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