As filed with the Securities and Exchange Commission on December 23, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT - DECEMBER 23, 1998
NIAGARA MOHAWK POWER CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
State of New York 1-2987 15-0265555
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
300 Erie Boulevard West, Syracuse, N.Y. 13202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 315-474-1511
<PAGE>
Item 5. Other Events
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(a) On December 22, 1998, the Company issued a press release regarding a
favorable ruling from the Internal Revenue Service regarding current
deductibility of consideration paid certain independent power producers to
terminate power contracts under the Master Restructuring Agreement. See press
release attached [Exhibit No. 99 (1)].
(b) On December 23, 1998, the Company issued a press release regarding an
agreement to sell its coal-fired electric generating plants. See press release
attached [Exhibit No. 99 (2)].
Item 7. Financial Statements and Exhibits
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Exhibits. Following is the list of Exhibits furnished in accordance with the
provisions of Item 601 of Regulation S-K, filed as part of this current report
on Form 8-K.
Exhibit 99 (1) - Press release of registrant issued on December 22, 1998
relating to a favorable ruling from the Internal Revenue Service regarding
current deductibility of consideration paid certain independent power producers
to terminate power contracts under the Master Restructuring Agreement.
Exhibit 99 (2) - Press release of registrant issued on December 23, 1998
relating to the Company's agreement to sell its coal-fired electric generating
plants.
<PAGE>
NIAGARA MOHAWK POWER CORPORATION AND SUBSIDIARY COMPANIES
SIGNATURE
---------
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 thereunto duly authorized.
NIAGARA MOHAWK POWER CORPORATION
--------------------------------
(Registrant)
Date: December 23, 1998 By /s/Steven W. Tasker
______________________________________
Steven W. Tasker
Vice President-Controller and
Principal Accounting Officer,
in his respective capacities
as such
<PAGE>
EXHIBIT INDEX
-------------
Following is the index of Exhibits furnished in accordance with the provisions
of Item 601 of Regulation S-K, filed as part of this current report on Form 8-K.
Exhibit No. 99 (1) - Press release of registrant issued on December 22, 1998
relating to a favorable ruling from the Internal Revenue Service regarding
current deductibility of consideration paid certain independent power producers
to terminate power contracts under the Master Restructuring Agreement.
Exhibit No. 99 (2) - Press release of registrant issued on December 23, 1998
relating to the Company's agreement to sell its coal-fired electric generating
plants.
EXHIBIT 99 (1)
NIAGARA MOHAWK RECEIVES FAVORABLE TAX RULING
SYRACUSE, Dec. 22 -- Niagara Mohawk Power Corp. (NYSE: NMK) today announced
that it has received a favorable ruling from the Internal Revenue Service in
connection with the termination of certain long-term power purchase contracts
earlier this year.
The IRS ruled that the cash and stock consideration paid by Niagara Mohawk to
various independent power producers to terminate such contracts is a deductible
business expense in 1998. The ruling was sought in connection with the Master
Restructuring Agreement, which was consummated on June 30, 1998, as an essential
component of the company's POWERCHOICE plan to reduce prices and promote
competition.
As a result of the deduction permitted by the ruling, Niagara Mohawk will
have a large net operating loss for 1998. This loss is expected to generate a
tax refund of approximately $122 million in 1999, and to be available for offset
against taxable income in future years as well.
Niagara Mohawk is an investor-owned energy services company that provides
electricity to more than 1.5 million customers across 24,000 square miles of
Upstate New York. The company also delivers natural gas to more than 500,000
customers over 4,500 square miles of eastern, central and northern New York.
EXHIBIT 99 (2)
NIAGARA MOHAWK REACHES AGREEMENT
TO SELL COAL STATIONS
SYRACUSE, Dec. 23 -- Niagara Mohawk Power Corp. (NYSE: NMK) today announced
an agreement to sell its Huntley and Dunkirk coal-fired electric generating
stations to NRG Energy, Inc. for $355 million. The coal stations have a book
value of approximately $370 million and a combined capacity of 1,360 megawatts.
NRG Energy, a wholly owned subsidiary of Northern States Power Company (NYSE:
NSP), is a leading independent power producer specializing in the development,
construction, operation, maintenance and ownership of power plants. NRG is
headquartered in Minneapolis and is one of the fastest growing generation
companies in the world.
Under a transition power contract in place through June 2003, Niagara Mohawk
will purchase electricity from NRG at prices consistent with those negotiated in
its POWERCHOICE regulatory agreement.
The Huntley Station, located in the Town of Tonawanda just north of the City of
Buffalo, consists of six coal-fired units with a total capacity of 760
megawatts. The two oldest Huntley units, Units #63 and #64, with a combined
capacity of 180 megawatts and a book value of approximately $23 million (of the
$370 million total book value), were placed into commercial operation in 1942
and 1948 respectively. As part of the agreement, NRG will retire or re-power
these two units, providing environmental benefits through reduced emissions.
The four remaining Huntley units have a combined capacity of 580 megawatts.
The Dunkirk Station is located on the shores of Lake Erie in Dunkirk, N.Y., and
consists of four coal-fired units with a total capacity of 600 megawatts.
"We believe we've received good value for our coal stations through the
competitive auction process," said William E. Davis, Niagara Mohawk's chairman
and chief executive officer. "For the past 45 years the Huntley and Dunkirk
stations have been an important part of Niagara Mohawk's commitment to deliver
safe and reliable power to our customers. We're pleased that NRG is the
successful bidder. Their commitment to invest in the competitive electric
generation business should provide a good future for these coal stations. We're
also pleased with the environmental benefits that will be created by NRG's
commitment to retire or re-power the two oldest Huntley units."
The sale is subject to approval by the New York Public Service Commission and
various federal agencies. Niagara Mohawk expects to complete the transaction by
the middle of 1999.
"With the sale of the coal stations, we've now completed the sale of the two
largest components of our fossil and hydroelectric generating portfolio," Davis
said. "In total, we've signed agreements to sell 2,021 megawatts of capacity
for $780 million, or $386 per kilowatt of installed capacity. This price
represents a 25 percent premium to their total book value of approximately $620
million. The proceeds from the sale will be used to accelerate the retirement
of debt consistent with our plan to create value for our shareholders."
Niagara Mohawk continues to pursue the sale of its oil and gas-fired plants in
Albany and Oswego and hopes to be in a position to announce the winning bidder
or bidders early in 1999. Divestiture of Niagara Mohawk's fossil-fueled and
hydroelectric generating facilities is one of the major elements of the
company's POWERCHOICE plan to reduce prices and promote competition.
Investment bankers Merrill Lynch & Co. and Donaldson, Lufkin & Jenrette
Securities are serving as Niagara Mohawk's financial advisors for the generation
asset sale.
Niagara Mohawk is an investor-owned energy services company that provides
electricity to more than 1.5 million customers across 24,000 square miles of
Upstate New York. The company also delivers natural gas to more than 500,000
customers over 4,500 square miles of eastern, central and northern New York.
