AES

THE POWER PLANTS OF AT LEAST FIVE UTILITIES IN NEW England and California get swapped this year for more than $5.3 billion. And happily, those holding bonds on the plants will be given cash for their coupons.

These utilities (see sidebar, "Going Once, Going Twice¼ Sold!") can expect their credit ratings to remain firm or even jump (em although that's debated by analysts. Such improved ratings may surprise market observers led to believe that loss of utility collateral would hurt investment grades.

Federal Agencies

Nuclear Plant Fines. The Nuclear Regulatory Commis-

sion has proposed fines totaling $2.1 million against Northeast Nuclear Energy Co. for many violations at the company's Millstone nuclear plant in Waterford, Conn. The fine marks the largest civil penalty ever proposed by the NRC. Northeast Utilities said it will pay the fine, which it called "a necessary and important step toward bringing to closure a very disappointing and difficult chapter in the company's history." The utility said it will not pass the cost onto ratepayers.

Electric Futures.

CON EDISON renamed two unregulated subsidiaries: ProMark Energy Inc. (now Con Edison Solutions Inc.) and Gramercy Development Inc. (now Con Edison Development Inc.). Con Edison Solutions will provide electricity, natural gas and oil to commercial and residential customers in the Northeast. Con Edison Development will invest in energy and nonenergy business in the U.S. and overseas.

AES Corp. has begun construction of an 830-megawatt, gas-fired combined-cycle power plant in San Nicolás, Argentina. Nichimen Corp.

DRIVEN BY ECONOMIC GROWTH, INDUSTRIALIZATION and privatization, worldwide demand for primary energy could double by 2020 (em requiring one 500-megawatt power plant to be built every 3.5 days to meet that need. Much of this growth will occur in Asian countries, most notably China, Thailand, India, South Korea, and Indonesia. China alone is expected to increase electric generating capacity by 15,000 MW per year at a cost of about $15 billion annually.

ENRON International has begun building a $150-million, 80-megawatt independent power project in Piti, Guam. Enron signed a 20-year energy conversion agreement to develop the baseload, slow-speed diesel plant by January 1999. In an unrelated deal, Enron Corp. selected Stone & Webster for engineering, design and procurement for two independent power producer plants in the United Kingdom. The 790-MW, gas-fired, combined-cycle plant in Lincolnshire is set for commercial operation in March 1999.

Duke Energy Power Services Inc.

The Northwest Power Planning Council is accepting comments on a revision of its Fourth Northwest Power Plan through Oct. 31. The plan is the latest created by the council since 1983. It reviews industry developments in generation, conservation, gas and electric. It also examines institutions created in response to increasing competition and policy evolution. The draft reflects recommendations of the Comprehensive Review of the Northwest Energy System and suggests ways to carry out many of those recommendations. For a copy (Document 97-11), call (800) 222-3355.

Competition abounds at wholesale, but retail is another story.

Will geography, politics and regional economics stand in the way of real choice for electric consumers at the retail level? Consider this tale of two power players.

One competitor, the Indiana Municipal Power Agency, is proud of itself. In its annual report, IMPA says that open access and competition in the wholesale market allowed it to trim wholesale rates for power it delivered to member distribution companies in 1996. "The results were remarkable," the report reads.

The Conservation Law Foundation of Boston and AES Corp. have teamed up to bid on the 18 New England Electric System power plants recently put up for sale under the NEES divestiture plan that is part of its restructuring settlement.

The unusual alliance puts the conservation group with a former industry adversary. If the alliance succeeds in its bid, it likely would close up to five of the most polluting plants to reduce acid rain and smog. Also, it would protect about 30,000 acres of land from development.

XENERGY Inc. and the Electric Power-Research Institute will team up in a second phase of a retail-wheeling pilot program study. The expanded study will include California, Massachusetts, Illinois and New York. Competitors, market share and sales strategies will be assessed. XENERGY first started the survey in July 1996. More than 40 utilities sponsored the research. The first phase focused mostly on New Hampshire, but also targeted electricity deregulation in the 50 states. Phase two, focusing on commercial-industrial customers, ends June 1997.

Liberalisation of the electricity markets in the UK and Scandinavia has driven merger activity in these territories. This was evident in 1996 with U.S. companies taking over MEB, East Midlands Electricity and Northern Electric, with London Electricity likely to follow in early 1997.