June 1 , 2002
would acquire LG&E Energy Corp. at $24.85 per share in cash under a definitive agreement signed in February between the two companies, marking the first entry by PowerGen into the U.S. market. The deal was valued at $3.2 billion. The cash offer would represent a 9.8 percent premium over LG&E's $22.63 closing share price on March 16, the same day the parties said they had filed a joint merger application with the Kentucky Public Service Commission.
LG&E CEO Roger W. Hale appeared confident of approval, noting that on March 15, the U.S. Securities and Exchange Commission had OK'd the merger between the UK's National Grid Group plc and New England Electric System.
"The SEC's approval of foreign ownership of a U.S. utility company clearly helps," said Hale. "Our transaction is very similar to [that] deal."
NiSource + Columbia Gas . NiSource said on Feb. 28 it had reached a definitive agreement to acquire Columbia Energy Group in a stock deal valued at approximately $6 billion. Columbia shareholders would receive $70 in cash for each Columbia share, plus a $2.60 face value SAILS (a unit consisting of a zero coupon debt security with a forward equity contract). On completion of the deal, the two companies would become subsidiaries of a new holding company.
Hydro Divestiture . California Assembly Speaker Fred Keeley introduced a bill on Feb. 22 that would allow the state temporarily to purchase the assets of Pacific Gas and Electric Co. so as to remove them from FERC jurisdiction and allow California to impose environmental and financial restrictions. The measure (Assembly Bill 1956) would allow the state's Consumers Energy & Environmental Security Authority to buy the assets, with the backing of Gov. Gray Davis.
PG&E currently has a proposal before the California PUC to divest its hydroelectric generating plants in a competitive auction. In a Jan. 18 letter to Gordon R. Smith, president and CEO of PG&E, Keeley argued that an immediate sale by PG&E to the state would provide the "mandate, time, and money to address the environmental, ratepayer/market power, and other important issues of divestiture at no expense to the taxpayer, ratepayer, or shareholder."
Electric Restructuring . The West Virginia House was considering HCR 27, which would restructure the state's electric industry to allow choice of electric supplier. The West Virginia PSC recently presented a restructuring plan to the legislature, finding choice is needed to ensure West Virginia's future economic viability.
Allocating Sale Proceeds. The Washington commission ruled that ratepayers should receive the excess in proceeds above net book value (up to original cost) on the sale of utility-owned generating plants, and 50 percent of any appreciation above original cost, in a decision that OK'd the sale of interests held by the state's three private electric companies (PacifiCorp, Avista Corp., and Puget Sound Energy) in the 1,340-megawatt Centralia power plant to TransAlta Corp. of Calgary, Alberta.
It added that it would factor in such payments in pending and future rate cases for the three utilities.
Commissioner Richard Hemstad dissented, saying that customers should receive any