News Release
Contact: Steve Unglesbee FOR IMMEDIATE RELEASE
410-495-2380
[email protected]
Michael W. Delaney
410-234-5466
[email protected]
Constellation Energy Group Subsidiary Buys
Nine Mile Point Nuclear Power Plants
Acquisitions Will Add 1,550 Megawatts to Merchant Energy Supply Portfolio
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BALTIMORE, Dec. 12, 2000 - Constellation Energy Group (NYSE: CEG) and the
owners of the two Nine Mile Point nuclear power plants, located in Scriba, N.Y.,
today announced that Constellation Nuclear will buy 100 percent of Unit 1 and 82
percent of Unit 2. Constellation will own a total of 1,550 megawatts of Nine
Mile Point's 1,757 megawatts of total generating capacity. The purchase price
net of fuel is $737 million. The total purchase price, including fuel, is $815
million.
The acquisitions of the Nine Mile Point plants will be immediately
accretive to Constellation Energy Group's earnings and are expected to
contribute approximately 20 cents per share to its merchant energy business
earnings in 2002. The sale is expected to close in mid-2001 after receipt of all
regulatory approvals. Key regulatory approvals are required from the Nuclear
Regulatory Commission, the Federal Energy Regulatory Commission, and the New
York State Public Service Commission.
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Constellation Energy's merchant energy business was ranked fifth in the
nation for sales of electric power in the third quarter of 2000. The
acquisitions of the Nine Mile Point plants are a significant step in
Constellation's strategy of controlling electric generating facilities that
support its rapidly growing merchant energy business.
"Constellation's purchase of the Nine Mile Point plants gives us an
important supply resource and fits well with the growth of our merchant energy
business in the Northeast," said Christian H. Poindexter, Chairman of the Board
and Chief Executive Officer of Constellation Energy Group. "We have an
outstanding record of operating and maintaining a diverse portfolio of electric
generating facilities, including more than 25 years experience in operating
Calvert Cliffs, one of the nation's best performing and most efficient nuclear
power plants and the first to receive renewed operating licenses. And we have
spent the last several years working to build a premier power marketing
organization that is uniquely equipped to serve the complex energy needs of
wholesale customers in a rapidly changing marketplace. Increasing the size of
our generation portfolio while improving its fuel diversity increases our
flexibility and strength as we strive to leverage our risk management skill set
to be the provider of choice in the wholesale energy market. This expands our
footprint and gives us an important toehold with a major customer base."
Constellation's existing portfolio of approximately 8,500 megawatts is
predominantly coal or nuclear. Constellation currently has a pipeline of 5,300
megawatts of natural gas-fired facilities under construction or in advanced
development in various regions of the United States that will begin operations
in 2001 through 2003. These gas-fired plants and the Nine Mile Point plants will
provide additional fuel diversity when they are added to Constellation's
existing portfolio.
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Charles W. Shivery, Co-President of Constellation Energy Group, said,
"Constellation is on pace to meet our goal of controlling approximately 30,000
megawatts of electric generating capacity by 2005 to support our rapid growth.
The Nine Mile Point acquisitions are an important step in expanding our
long-term supply portfolio. The deal includes power purchase agreements that
will give us an attractive rate of return and a stable platform for further
expansion. Our marketing organization has many options in meeting near and
intermediate-term supply obligations. But direct control of electric generating
facilities provides us our best supply option for long-dated commitments. For
this reason, we will be focusing on acquisitions of existing plants going
forward in addition to our development and construction program."
One-half of the purchase price, or $407.5 million, is due at the closing of
the transaction. The sellers will finance the remaining half of the purchase
price for a period of five years with equal annual principal repayments.
Constellation expects to close the transaction with funds from currently
available sources. Longer term, Constellation Energy expects to fund its growth
and operating objectives with a mixture of debt and equity consistent with its
overall goal of maintaining an investment grade credit profile.
Nine Mile Point includes two boiling-water reactors. Unit 1 is a
609-megawatt reactor that entered service in 1969. Unit 2 is a 1,148-megawatt
reactor that began operation in 1988.
Niagara Mohawk Power Corporation is the sole owner of Nine Mile Point Unit
1. The co-owners of Nine Mile Point Unit 2 who are selling their interests to
Constellation include Niagara Mohawk (41 percent), New York State Electric and
Gas (18 percent), Rochester Gas & Electric Corporation (14 percent) and Central
Hudson Gas & Electric Corporation (9 percent). The Long Island Power Authority,
who owns 18 percent of Nine Mile Point Unit 2, has chosen not to sell its
portion at this time. The plant is located about 40 miles north of Syracuse, New
York.
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The terms of the transaction include power purchase agreements whereby
Constellation has agreed to sell 90 percent of its share of the Nine Mile Point
plants' output back to the sellers for approximately 10 years at an average
price of nearly $35 per MWh over the term of the power purchase agreements. The
contracts for the output of both plants are based on operation of the individual
units. As such, the acquisition provides for an attractive rate of return
underwritten by the contract prices for power with opportunities for enhancement
based on the uncommitted output of the plants.
The sellers will be transferring approximately $450 million in
decommissioning funds at the time of closing. Constellation Nuclear believes
this transfer is sufficient to meet the decommissioning needs of its share of
the Nine Mile Point site.
Constellation Energy Group is a holding company whose subsidiaries include
energy-related businesses focused mostly on power marketing, generation and
portfolio management, plus BGE, which provides service to more than 1.1 million
electric customers and more than 590,000 natural gas customers in Central
Maryland. Constellation Nuclear is a wholly owned subsidiary of Constellation
Energy Group.
Constellation Energy Group reported combined revenues in 1999 of nearly
$3.8 billion and had over $11 billion in assets as of September 30, 2000.
Constellation Energy Group recently announced that it intends to separate
its wholesale merchant energy and retail energy businesses into two stand-alone,
publicly traded companies as soon as all required approvals have been obtained.
The separation is expected to occur in mid-to-late 2001.
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Analysts Conference Call Information: Constellation Energy Group is hosting an
analyst conference call today at 2 p.m. (EST). Investors who wish to participate
should call 1-800-446-2782 shortly before 2 p.m. The international number is
1-847-413-3235. The conference host is Constellation Energy Group/Poindexter.
Note to Editors: A conference call for analysts is scheduled for 2:00 PM today
by calling 1-800-446-2782 before the start time. Editors may monitor this
conference The host for the call is Constellation Energy Group/Poindexter. A
digital tape reply will also be available for seven days by calling
1-888-843-8996. The confirmation number is 3248170.
Forward Looking Statement
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Statements are made in this press release that are considered forward-looking
statements within the meaning of the Securities Exchange Act of 1934. Sometimes
these statements will contain words such as "believes," "expects," "intends,"
"plans," and other similar words. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other important factors
that could cause actual performance or achievements to be materially different
from those projected. These risks, uncertainties and factors include, but are
not limited to: satisfaction of all the conditions precedent to the closing on
the purchase of the Nine Mile Point nuclear power plants, including obtaining
all regulatory approvals; obtaining all regulatory approvals necessary to close
on the previously announced investment by an affiliate of The Goldman Sachs
Group, Inc. in Constellation's merchant energy business and complete the
separation of Constellation's merchant energy business from its retail services
business; satisfaction of all conditions precedent to the transaction with
Goldman Sachs; general economic, business and regulatory conditions; energy
supply and demand; competition; federal and state regulations; availability,
terms and use of capital; nuclear and environmental issues; weather;
implications of the Order issued by the Maryland PSC regarding implementation of
customer choice including any appeals of the order; commodity price risk;
operating generation assets in a deregulated market without the benefit of a
fuel rate adjustment clause; loss of revenues due to customers choosing
alternative suppliers; higher volatility of earnings and cash flows; increased
financial requirements of nonregulated subsidiaries; inability to recover all
costs associated with providing electric retail customers service during the
electric rate freeze period; and implications from the transfer of BGE's
generation assets and related liabilities to nonregulated subsidiaries of
Constellation Energy Group, including the outcome of any appeal of the PSC order
regarding the transfer. Given these uncertainties, undue reliance should not be
placed on these forward-looking statements. Please see periodic reports filed
with the Securities and Exchange Commission for more information on these
factors. These forward-looking statements represent estimates and assumptions
only as of the date of this press release, and no duty is undertaken to update
any forward-looking statements to reflect new information, events or
circumstances after the date of this press release or to reflect the occurrence
of unanticipated events.
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