UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
December 16, 1999
(Date of earliest
event reported)
PECO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 1-1401 23-0970240
(State or other (Commission (IRS Employer
jurisdiction of file number) Identification
incorporation) Number)
230l Market Street, Philadelphia, Pennsylvania 19101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 841-4000
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Item 5. Other Events
Certain information contained in this Current Report on Form 8-K is
forward-looking information based on current expectations and plans that involve
risks and uncertainties. Forward-looking information includes, among other
things, statements concerning the intentions of the parties to the
Illinova-Dynegy merger and concerning future operation of the Clinton Power
Station (Clinton). Although PECO Energy Company (the Company) believes that this
forward-looking information is accurate, its business is dependent on various
regulatory issues, general economic conditions and future trends, and these
factors can cause actual results to differ materially from the forward-looking
information that has been provided. The reader is cautioned not to put undue
reliance on this forward-looking information, which is not a guarantee of future
performance and is subject to a number of uncertainties and other factors, many
of which are outside of the Company's control.
On December 16, 1999, the Company issued the following press release:
Representatives of Illinois Power Company (IP) and AmerGen Energy Company,
L.L.C. (AmerGen) announced today they have signed closing documents that
officially transfer ownership of Clinton from IP to AmerGen.
Effective at 12:01 a.m. December 15, 1999, AmerGen, a joint venture between PECO
Energy Company, of Philadelphia, and British Energy, of Edinburgh, Scotland,
holds the license for Clinton's operation and has full responsibility and
authority over the nuclear station.
The completed transaction comes just one year after IP's decision to exit its
nuclear business and less than six months after IP and AmerGen reached
definitive agreement on terms for the sale.
The Clinton transaction also marks AmerGen's first completed purchase of a U.S.
nuclear plant.
"This is a magnificent day for AmerGen, for PECO Energy, for the Clinton team,
and for the nuclear industry," said Michael J. Egan, senior vice president,
Finance, and chief financial officer for PECO Energy, and chairman of AmerGen.
"We are extremely pleased that Clinton is AmerGen's first finalized acquisition.
It is a superior plant with an outstanding operating team."
"We are also delighted with the great working relationship with IP and the
effective and efficient review of the regulatory authorities that enabled us to
complete the transition in excellent time," Egan said.
<PAGE>
Jerry Rainey, PECO Nuclear president and chief nuclear officer and AmerGen CEO,
said, "With the improvements we have planned, Clinton can operate consistently
as one of the nation's finest nuclear power plants for many years to come, not
only providing clean energy and supporting economic growth for the region, but
also becoming a proud symbol of the country's revitalized nuclear energy
industry."
Rainey announced that Michael T. Coyle, a graduate of the U.S. Naval Academy and
a retired Rear Admiral from the Navy's nuclear operations, has been named vice
president, Clinton, and will be in charge of the plant. He replaces Jack
McElwain, who led the recovery and restart of Clinton, who now moves to a vice
president position at the Nine Mile Point nuclear plant in New York.
Selling the nuclear station virtually assures completion of IP parent Illinova
Corporation's (Illinova) merger with Dynegy, Inc., expected to close on or about
January 4, 2000. The merger, announced June 14, 1999 is contingent on Illinova's
divesting its nuclear assets, was approved by both companies' shareholders on
October 11, 1999.
"This transaction is a milestone in our company's transformation process," said
Charles E. Bayless, Illinova and Illinois Power chairman. "Selling Clinton to
AmerGen is an excellent strategic fit for both our companies. Exiting nuclear
and completing our upcoming merger positions us to deliver increased value for
our shareholders."
Dr. Robin Jeffrey, AmerGen president and British Energy's executive director,
North America, said, "This is an important day not only for AmerGen but also for
British Energy because Clinton Power Station is British Energy's first
U.S.-based asset."
"Two years ago, when PECO Energy and British Energy came together to form
AmerGen, we developed the strategy to invest in existing U.S. nuclear power
stations," Jeffrey said. "This pioneering strategy was recognized a few weeks
ago when we won the coveted Financial Times Global Energy Award for `Boldest
Successful Investment Decision, 1999'. So I would like to congratulate and thank
everyone who worked so hard to ensure the smooth transition of ownership from
Illinova to AmerGen; this was a real team effort."
Basic terms for the sale are unchanged from the definitive agreement announced
in July 1999. AmerGen has paid IP $20 million for the plant and property and has
assumed full responsibility and liability for operating and ultimately
decommissioning the nuclear station.
IP has transferred to AmerGen the existing decommissioning trust funds of $98
million and is making additional payments to the decommissioning trust funds
intended to be sufficient to provide for the actual decommissioning of Clinton
by 2026, when the plant's operating license is scheduled to expire.
<PAGE>
Effective with the transfer of ownership, Clinton Power Station personnel are
now employees of AmerGen. As part of the asset purchase agreement, AmerGen
committed to employ existing plant personnel at substantially similar wages and
benefits and to recognize the International Brotherhood of Electrical Workers
Local Unions 51 and 1306 as bargaining agents for transferred bargaining unit
employees.
IP will purchase at least 75 percent of Clinton's electricity output for its
customers through 2004.
"We are pleased with AmerGen's commitment to the Clinton Power Station," said
David W. Butts, Illinois Power executive vice president and chief operating
officer. "The plant's operation retains tremendous economic and community
benefits for Central Illinois, and it provides our customers a continued power
supply."
Clinton, located six miles east of Clinton, Ill., is a nuclear-fueled boiling
water reactor. It began producing electricity in 1987.
IP is an electric and natural gas utility that serves 650,000 customers over a
15,000-square-mile area of Illinois. IP is a subsidiary of Illinova [NYSE:ILN],
headquartered in Decatur, Ill., an energy services holding company with annual
revenues of $2.4 billion.
AmerGen was formed in 1997 as a joint venture by PECO Energy Company, of
Philadelphia, and British Energy, of Edinburgh, Scotland, to purchase and
operate nuclear plants in the United States. Both companies have a strong
commitment to the future of nuclear power and share similar operational cultures
involving people, processes, safety and reliability.
The Company is an electric and gas utility serving 1.5 million electric
customers in the five-county Philadelphia area and 400,000 natural gas customers
in four suburban counties. It is one of the nation's largest nuclear utilities,
producing more than 33.5 billion kilowatt-hours of electricity in 1998 at its
Limerick and Peach Bottom generating stations.
The Company has set new nuclear performance standards in safety, availability
and capacity factors, efficient refueling outages, and low operating and
maintenance costs.
British Energy provides more than 20 percent of Britain's electricity and is the
United Kingdom's largest generator. It owns and operates 15 nuclear power
reactors in the U. K., with 9,600 megawatts of generation, including seven
advanced gas-cooled nuclear stations and one pressurized water reactor station.
In July 1996, British Energy was successfully privatized through a public
offering of stock. British Energy has distinguished itself on nuclear operations
through its outstanding safety record and by reducing costs and increasing
output and profit following privatization.
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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.
PECO ENERGY COMPANY
\S\ Jean H. Gibson
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Vice President & Controller
December 16, 1999
