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Exhibit 99.1
Niagara [LOGO] Mohawk
News Release
For Release 6:30 a.m. EST, Dec. 12, 2000
Niagara Mohawk, NYSEG, Rochester Gas and Electric and Central Hudson
to sell Nine Mile Point nuclear assets to Constellation Nuclear
in deal valued at $1.04 billion
Value includes $815 million in cash and payments, $134 million in
interest and $88 million in decommission savings
Syracuse-- Dec. 12 - Niagara Mohawk Power Corp. will sell its ownership
of the Nine Mile Point 1 and 2 nuclear plants, and New York State Electric &
Gas Corp., (NYSEG) Rochester Gas and Electric Corp., and Central Hudson Gas &
Electric Corp. have agreed to sell their ownership of the Nine Mile 2 nuclear
plant, to Constellation Nuclear, under an agreement announced today.
Constellation Nuclear was the successful bidder in a competitive auction for
the plants. The purchase price is $815 million in cash and payments and $134
million in interest for 82 percent of the 1,148-megawatt Nine Mile Point 2
plant and 100 percent of the 609-megawatt Nine Mile Point 1 plant. Of the
purchase price, $407.5 million will be paid at closing and another $407.5
million in principal and $134 million in interest will be paid in five annual
payments. The total of payments and interest for the 82 percent of Nine Mile
2 is $676.6 million. The total of payments and interest for Nine Mile 1 is
$272.6 million.
The sellers' pre-existing decommission funds will be transferred to
Constellation, who will take responsibility for all future decommissioning
funding. No additional funding from the sellers is required, a saving to the
sellers of $88 million.
Constellation Nuclear, a wholly owned subsidiary of Constellation Energy
(NYSE:CEG), is the owner and operator of the two-unit Calvert Clifts nuclear
plant in Maryland.
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Niagara Mohawk is a wholly owned subsidiary of Niagara Mohawk
Holdings, Inc. (NYSE:NMK). NYSEG is a wholly owned subsidiary of Energy
East Corp. (NYSE: EAS). Rochester Gas and Electric is a wholly owned
subsidiary of RGS Energy Group (NYSE: RGS). Central Hudson is a wholly
owned subsidiary of CH Energy Group, Inc. (NYSE:CHG). The Long Island
Power Authority, an 18 percent owner of Nine Mile 2, is not
participating in the sale.
The sale is consistent with an April New York State Public
Service Commission order urging the owners to determine the market
value of the plants through an open, competitive process. Department of
Public Service staff participated in the auction process.
Niagara Mohawk will receive $145 million at closing and five
annual principal and interest payments totaling $193 million for its 41
percent ownership share of Nine Mile 2. NYSEG will receive $64 million
at closing and five annual principal and interest payments totaling $85
million for its 18 percent ownership share of Nine Mile 2. Rochester
Gas and Electric will receive $ 50 million at closing and five annual
principal and interest payments totaling $66 million for its 14 percent
ownership share of Nine Mile 2. Central Hudson will receive $32 million
at closing and five annual principal and interest payments totaling $42
million for its 9 percent ownership share of Nine Mile 2. Niagara
Mohawk will also receive $117 million at closing and five annual
principal and interest payments totaling $155 million for its 100
percent ownership share of Nine Mile 1. All payments are subject to
purchase price adjustments at the time of closing.
Also part of the transaction is a purchase power agreement
calling for Constellation Nuclear to provide electricity to the sellers
at negotiated competitive prices for approximately 10 years. After the
completion of the purchase power agreement a revenue sharing agreement
begins, which will provide a hedge against electricity price increases
and could provide the sellers additional future revenue through 2021.
Both the purchase power agreement and the revenue sharing agreement are
based on plant output.
The sale of the plants furthers the state's initiative to
separate electricity generation from transmission and distribution,
said Niagara Mohawk chairman and chief executive officer William E.
Davis, speaking on behalf of the selling utilities.
"The competitive auction process maximized the value for the
plants and puts them in the hands of a proven nuclear organization
committed to the continued safe and efficient operations of the
plants," Davis said. "The sale also protects customers and shareholders
from unforeseen operating and decommissioning costs."
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As part of the agreement, Constellation Nuclear will offer to
continue employment to the approximately 1,330 employees at the two
plants and will become the successor to the collective bargaining
agreement with the International Brotherhood of Electrical Workers
Local 97.
The Nuclear Regulatory Commission, Federal Energy Regulatory
Commission, New York State Public Service Commission, and other
regulatory bodies must approve the sale. The transaction is targeted to
close in mid-2001.
Constellation Energy, parent company of Constellation Nuclear, 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 590,000 natural gas customers in Central Maryland.
Nine Mile Point is a two-unit boiling water reactor site. Nine
Mile 1 began producing electricity in 1969. Nine Mile 2 began producing
electricity in 1988. Niagara Mohawk operates both plants. The plants
are located in Scriba, N.Y., approximately 40 miles north of Syracuse.
J.P. Morgan & Co. Inc. acted as co-auction manager and financial
advisor to Niagara Mohawk and NYSEG.
Navigant Consulting Inc. acted as co-auction manager and
financial advisor to Rochester Gas and Electric and Central Hudson.
Note to Editors:
A media conference call will be conducted today at 11:15 a.m.
Eastern Standard Time. To join the conference call, please dial 1-800-
683-1535 after 11:05 a.m., ask to be connected to the "Nuclear Plants"
call. For those unable to join the call at that time, a replay will be
available for 48 hours by calling 866-334-7071.
Media Contacts:
Niagara Mohawk - Alberto Bianchetti 315-349-7183
NYSEG - Clayton Ellis 607-762-7336
RG&E - Mike Power 716-724-8828
Central Hudson - Denise VanBuren 845-471-8323
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Investor Contacts:
Niagara Mohawk - Leon T. Mazur 315-428-5876
NYSEG - Thorn Dickinson 607-347-2561
RG&E - Mark Graham 716-724-8176
Central Hudson - Steven V. Lant 845-486-5254
NOTE: This release contains statements that constitute forward-looking
information. Words such as "will" and "expect" and similar expressions
are intended to identify forward-looking statements. Such forward-
looking statements are subject to certain risks, uncertainties and
assumptions. All of these forward-looking statements are based on
estimates and assumptions made by the company's management which,
although believed by the company's management to be reasonable, are
inherently uncertain. Such forward-looking statements are not
guarantees of future performance or results and involve certain risks
and uncertainties. Actual results or developments may differ materially
from the forward-looking statements as a result of various factors.
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