Oglethorpe Power Corp. recently completed an extensive restructuring that transformed the generation and transmission power cooperative into three specialized companies better able to compete in a restructured electric market.

In addition, the company's board of directors has approved a deal that would allow Morgan Stanley Capital Group to supply Oglethorpe Power Co. one-half of its power needs for up to eight years. The deal has been presented to the 39 Electric Membership Corporations (EMCs) for final approval.

Oglethorpe was divided in early March into separate power generation, transmission and system operations companies, each with its own management. Georgia Transmission Corporation will run the transmission portion of the business, not-for-profit Georgia System Operations Corp. will run the operations portion, and Oglethorpe Power will remain as owner and operator of power generation.

Greg Jones, Oglethorpe spokesman, said Oglethorpe intends to create a more efficient and effective company by spinning off into three specialized units. "All of their energy would be focused on one operation," he said. "Like a lot of others, we see the environment changing. We made this change to align ourselves with the trends that are developing in the industry."

Separate boards of directors will govern each unit, ranging from 9 to 11 members. In addition to EMC directors, the boards will now include industry leaders. This is the first time the company has brought in outside directors, Jones said, which will bring a new level of "expertise to the table."

New wholesale power and transmission contracts were developed with each of the 39 members. The new contracts require each EMC to pay a fixed share of existing resources. However, the contracts allow the members greater flexibility in meeting future power and transmission needs.

The board of directors gave the companies the go-ahead in late February to pursue a final agreement with Morgan Stanley for approximately 50 percent of its power. An unspecified number of the

39 members must approve the agreement.

The Morgan Stanley power agreement marks the second such arrangement Oglethorpe has developed in preparation for restructuring. Last November, Oglethorpe Power signed a 15-year contract with LG&E Power Marketing to supply 50 percent of its power needs, or more than 200 million MWh over the life of the contract. The contract reportedly was valued at $5 billion, and stands as one of the largest, long-term power marketing arrangements ever.

"The idea is that you don't want to put all of your eggs in one basket," Jones said. He added that Oglethorpe had entered into a series of short-term power contracts over the last year with various companies, including Enron and Duke/Louis Dreyfus. Jones said Oglethorpe wanted to get the power agreements in place before completing the restructuring. (em LB/ES t

Lori A. Burkhart is associate legal editor, and Elizabeth Striano managing editor of PUBLIC UTILITIES FORTNIGHTLY.

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