SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934
Date of Report - August 8, 2000
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 1-3268 14-0555980
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State or other (Commission File (IRS Employer
jurisdiction of Identification) Number)
incorporation number
284 South Avenue, Poughkeepsie, New York 12601-4879
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (845) 452-2000
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Item 5. Other Events.
1. Auction of the Roseton and Danskammer Plants
Reference is made to the captions "Competitive Opportunities Proceeding
Settlement Agreement" and "Auction of Fossil Generation Plants" in Note 2 of the
Notes to Financial Statements referred to in Item 8 of the Registrant's Annual
Report, on Form 10-K, for the year ended December 31, 1999, for a discussion of
the sale of the Registrant's interests in the Roseton Steam Electric Generating
Plant ("Roseton Plant") and the Danskammer Electric Generating Station
("Danskammer Plant") required by that certain Amended and Restated Settlement
Agreement, dated January 2, 1998, by and among the Registrant, the Staff of the
New York State Public Service Commission ("PSC") and others ("Settlement
Agreement"), which Settlement Agreement was thereafter accepted and approved by
the PSC by final Order issued and effective on June 30, 1998.
On August 8, 2000, Registrant announced that it has agreed to sell its
interests in the Roseton Plant and the Danskammer Plant to Dynegy Inc., and
issued a press release about the sale as follows:
CENTRAL HUDSON AND CO-OWNERS TO SELL FOSSIL-FUEL GENERATING PLANTS
TO DYNEGY INC. FOR $903 MILLION
Central Hudson Gas & Electric Corporation today announced that it, along
with Consolidated Edison Company of New York, Inc. and Niagara Mohawk Power
Corporation, have agreed to sell the Danskammer and Roseton electric generating
plants to Dynegy Inc. for $903 million. The plants are located in the Town of
Newburgh, Orange County, in the State of New York, and have a combined capacity
of 1700 megawatts.
"We are quite pleased with the sale and will apply Central Hudson's share
of the proceeds to benefit our customers and shareholders," said Paul J. Ganci,
Chairman of the Board, President and Chief Executive Officer of CH Energy Group,
Inc. [NYSE: CHG], Central Hudson's holding company parent.
<PAGE>
"Customers will benefit in three ways. The gain from the sale of the
plants, when combined with other measures we have taken, will avoid any future
payments by customers, commonly referred to as 'competitive transition charges,'
in order to recover stranded costs. Secondly, the proceeds will further provide
Central Hudson with the additional funds to accelerate our programs to enhance
electric service reliability -- without impacting customer prices. And, Central
Hudson customers will benefit from a transition power agreement which enables
Central Hudson to purchase varying amounts of electricity from the plants
through 2004," Ganci said.
He added that, "To a large measure, Central Hudson's success as a low-cost
generator was the result of the innovation, commitment, and productivity of our
employees at the plants, whose employment is protected under terms of the sale
agreement."
The proceeds received from the sale will also benefit shareholders. "It
re-affirms and enhances the Company's strategy to reinvest and redeploy capital
at an accelerating pace in the acquisition of competitive energy services and
supply businesses in the Northeast," Ganci said.
Senior Vice President Ronald P. Brand, who headed the Central Hudson
auction team, also explained that as a delivery company, Central Hudson's
primary mission will be to safely and reliably deliver electricity that
customers have purchased in the competitive marketplace. "The transition power
purchase agreement will enable us to offer some element of electric price
stability during a three- to four-year period while those competitive markets
mature," he said.
He noted that the Company expects that the gain from the sale will enable
it to maintain delivery wire charges that are among the lowest in the region. At
the same time, Central Hudson will -- with the approval of the New York Public
Service Commission -- be investing to further enhance electric service
reliability.
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"The sale agreement recognizes the contribution of our 200 employees at
the plants, and also provides protection for them," Brand said. Dynegy will
retain all unionized employees and will assume the current collective bargaining
agreement, and will make employment offers to most of the 40 management
employees. Those individuals not retained by Dynegy will be employed by Central
Hudson.
John Reed, Executive Director with Navigant Consulting, Inc., a leading
asset divestiture firm retained by Central Hudson to manage the auction,
attributed the successful sale to the productivity and the actions that Central
Hudson took over the last decade to consistently invest in the power plants to
maintain them at the highest level of operational and environmental performance.
"Central Hudson, its management team and the employees deserve the lion's
share of the credit for the high level of interest expressed by bidders and for
the competitive sales price offered by the winner," said Reed. "The final price
is the result of sound management and dedicated, committed employees who operate
the plants safely and effectively."
Central Hudson estimates that its share of the gross sale proceeds will be
about $695 million, and that its net proceeds, after taxes and transaction
costs, will be an estimated $450 million. Included in these proceeds will be an
earned auction incentive of approximately $18 million, which Central Hudson,
under its arrangement with the Public Service Commission, will be entitled to
retain for the benefit of its shareholders.
According to Senior Vice President Arthur R. Upright, the sale of the
plants will require the approval of the Public Service Commission. Central
Hudson expects to file promptly for that approval and will propose to establish
a balanced and fair distribution to provide benefits to customers and
shareholders. Portions of the transaction will also require approval from the
Federal Energy Regulatory Commission and the Federal Trade Commission.
<PAGE>
The sale will be made to comply with the Public Service Commission's 1996
and 1998 Orders to deregulate the electric utility industry in New York State.
The Commission required Central Hudson to sell, at auction, its fossil fuel
plants by July 2001. The sale is being made as a result of a competitive auction
process and is subject to regulatory approval. It is expected to close within
four to six months.
Navigant Consulting, Inc. served as financial advisor on the transaction.
Legal counsel was provided by Dickstein, Shapiro, Morin & Oshinsky, and the firm
of Gould and Wilkie.
ABOUT DANSKAMMER AND ROSETON:
The Danskammer plant consists of four generating units, constructed
between 1951 and 1967, with a total generating capacity of 500 megawatts; Units
1 and 2 burn fuel oil and natural gas, while Units 3 and 4 burn coal and natural
gas to produce electricity. In addition, the site contains 5 megawatts of diesel
generators for use in restarting the main units. The two identical Roseton
units, which went on line in 1974, have a combined capacity of 1,200 megawatts
and produce electricity from burning fuel oil or natural gas. Central Hudson
currently owns 35 percent of the Roseton facility, while Niagara Mohawk Power
Corporation and Consolidated Edison Company of New York, Inc. own 25 and 40
percent, respectively.
ABOUT CENTRAL HUDSON:
Central Hudson Gas & Electric Corporation is a combination natural gas and
electric utility serving a population of approximately 623,000 in a 2,600
square-mile area of the Mid-Hudson Valley, stretching from 25 miles north of New
York City to 10 miles south of Albany. Central Hudson serves parts of Albany,
Columbia, Dutchess, Greene, Orange, Putnam, Sullivan and Ulster counties. It is
a subsidiary of CH Energy Group, a family of energy generation and services
companies with holdings throughout the Northeast.
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ABOUT DYNEGY INC.:
Dynegy Inc. [NYSE: DYN] is one of the country's leading energy merchants.
Through its leadership position in energy marketing, power generation,
transportation, gathering and processing, the company provides energy solutions
to its customers primarily in North America, the United Kingdom and Europe.
# # #
Statements included in this press release which are not historical in nature,
are intended to be, and are hereby identified as, "forward-looking statements"
for purposes of the safe harbor provided by Section 21E of the Securities
Exchange Act of 1934, as amended by Public Law 104-67, and within the meaning of
the Securities Litigation Reform Act of 1995. Forward-looking statements may be
identified by words including "anticipate," "believe," "intends," "estimates,"
"expect," and similar expressions. The Company cautions readers that
forward-looking statements, including without limitation, those relating to the
Company's future business prospects, revenues, proceeds, working capital,
liquidity, income and margins, are subject to certain risks and uncertainties
that could cause actual results to differ materially from those indicated in the
forward-looking statements, due to several important factors including those
identified from time-to-time in the Company's reports filed with the SEC. All
forward-looking statements are intended to be subject to the safe harbor
protections provided by the laws mentioned above. A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those stated in the forward-looking
statements. Those factors include weather, energy supply and demand,
developments in the legislative, regulatory and competitive environment,
electric and gas industry restructuring and cost recovery, future market prices
for energy, capacity and ancillary services, nuclear industry regulation, the
outcome of pending litigation, and certain environmental matters, particularly
ongoing development of air quality regulations and industrial waste remediation
requirements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By: /s/ Donna S. Doyle
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DONNA S. DOYLE
Vice President - Accounting & Controller
Dated: August 8, 2000
