VEAZIE — Maine’s second-largest investor-owned electric utility is selling all of its hydroelectric generation assets to a Virginia-based energy company for $89 million, nearly twice the estimated value.
Top officials from Bangor Hydro-Electric Co. and PP&L Global Inc. of Fairfax, Va., gathered Monday in a small town park overlooking the 107-year-old Veazie Dam to announce the deal.
Bangor Hydro is the third major electric utility in Maine to agree to sell its power plants since the state passed a law last year deregulating the electric industry to create competition.
Central Maine Power Co., the state’s largest electric utility, is attempting to sell its power plants to Florida Power & Light for $846 million. Maine Public Service Co. in Aroostook County announced last month it is seeking approval to sell its hydroelectric and other generating assets to WPS Power Development Inc. of Green Bay, Wis., for $37.4 million.
All the deals are subject to approval by the Maine Public Utilities Commission and the Federal Energy Regulatory Commission. If approved, the sale is expected to be complete by mid-1999. Bangor Hydro has agreed to purchase power from PP&L Global during the period when the sale becomes final until March 2000, when Maine consumers will begin choosing their power supplier.
Bangor Hydro will continue to exist as an electric transmission and distribution company after March 2000.
Bangor Hydro President Robert S. Briggs made no promises of immediate rate reductions for the company’s 100,000 customers. Proceeds from the sale will be used to reduce the company’s $277 million debt.
“It will strengthen our financial position,” said Briggs. Reducing debt will make the utility less risky to lenders and investors.
The deal will result in 20 Bangor Hydro workers likely being shifted to similar positions with the new owner.
PP&L Global Inc. is one of five subsidiaries owned by PP&L Resources Inc., a large holding company based in Allentown, Pa. The parent company and its subsidiaries have assets of $9.9 billion, revenues of more than $3 billion, own 8,000 megawatts of generation and serve more than 3 million customers in the world.
“This opportunity represents a great position for us in the New England marketplace as well as Maine,” said Robert D. Fagan, president of PP&L Global Inc. “These assets represent some of the last hydro facilities available in the New England power pool.”
Fagan said PP&L Resources Inc., formerly known as Pennsylvania Power and Light Co., has an 80-year history in the power generation business.
Bangor Hydro is selling assets that produce a total of 89 megawatts of electricity. Company officials say the book value on the assets sold is between $50 million and $55 million.
In addition to its hydro assets, Bangor Hydro is selling its 8.33 percent ownership interest, or 51.7 megawatts, in the Wyman Unit, an oil-fired facility in Yarmouth. CMP owns 59.15 percent of the 600-megawatt Wyman unit, which it plans to sell to Florida Power and Light Co.
Bangor Hydro owns seven hydroelectric projects. Six are in the Penobscot River basin at Howland, Medway, Milford, Orono, Stillwater and Veazie. The other is on the Union River in Ellsworth. Most of these hydro projects run 24 hours a day. Their operation is inexpensive and the fuel supply, water, is relatively stable.
Bangor Hydro is selling its 50 percent interest in the 13-megawatt facility at Enfield, a hydro project that spans the Penobscot River between Howland and West Enfield.
Bangor Hydro is not selling its contracts with nonutility generators such as the Penobscot Energy Recovery Co. in Orrington. Also, the utility decided not to sell its two small water storage facilities, the Sebec and Seboeis dams, which are in the Piscataquis River basin.
Bangor Hydro will retain its 60 percent ownership of East Branch Improvement Co., which owns three storage dams at the head of the East Branch of the Penobscot River. Great Northern Paper Co. owns the remaining 40 percent. Two of the dams, Lock and Telos, impound waters of the Allagash Wilderness Waterway (including Chamberlain and Telos lakes and Round Pond). The third dam is downstream of Telos and impounds Matagamon Lake.
The sale does not include Bangor Hydro’s 11 diesel-powered internal combustion generator units at three sites on the fringe of its distribution system. The units, located at Eastport, Medway and Bar Harbor, are used to support or augment the voltage lags at the end of the line during periods of heavy loads.
The sale does not include about 30 acres surrounding Graham Station in Veazie, which is an oil-fired steam turbine facility. Earlier, Bangor Hydro sold the land to Casco Bay Energy Co., which plans to construct a $221 million gas-fired power plant that will produce 520 megawatts of electricity. The plant will be powered by the proposed Maritimes & Northeast gas transmission line and regional transmission system.
The sale does not include the two oil-fired steam turbines at the Veazie site.
Earlier this month, PP&L Global announced plans to build a $225 million gas-fired power plant near Kingman, Ariz., known as the “Griffith Energy Project.” In June, PP&L Global announced it had doubled its ownership stake in South Western Electricity, a regional electricity company based in Bristol, England.
PP&L Global subsidiaries and affiliates now serve more than 2 million electric customers in the United Kingdom, Chile and El Salvador. In addition PP&L Global owns interest in electric generation facilities in Spain, Portugal, Bolivia and Peru. It is negotiating development rights for additional generation in locations throughout the United States.
PP&L Inc. markets or trades wholesale energy to 26 states and Canada through its energy marketing center.