BANGOR, Maine -- Continuing the company's expansion outside the mid-Atlantic region, PP&L Resources, Inc. (NYSE: PPL) Thursday (5/27) completed the acquisition of most of Bangor Hydro-Electric Company's (NYSE: BGR) electric generating assets and certain transmission rights.
Under the agreement, PP&L Global, a PP&L Resources subsidiary, acquired all but one of Bangor Hydro's hydroelectric assets, as well as its interest in an oil-fired generation facility. The assets have a total base load capacity of 83 megawatts.
PP&L Global also is acquiring Bangor Hydro's long-term rights to transmit power over the Maine Electric Power Co. (MEPCO) transmission facilities connecting the New England Power Pool (NEPOOL) to New Brunswick, Canada; Bangor Hydro's rights as a participant in the regional utilities' agreements with Hydro Quebec pursuant to an agency agreement; and Bangor Hydro's rights to develop a second high-voltage transmission line that will connect NEPOOL to New Brunswick, Canada. The proposed transmission line has been reviewed by all necessary federal and state agencies.
"This acquisition is a significant step in PP&L Resources' plan to expand its generation holdings in the Northeast quadrant of the United States, as part of its strategy to more than double its electricity generating capacity -- to 20,000 megawatts -- in key regions of the United States," said Paul T. Champagne, president of PP&L Global.
"PP&L Global is pleased to own and operate these well-maintained and low-cost facilities that meet the Maine Legislature's criteria for environmentally friendly power. We look forward to being good stewards of natural resources in the state of Maine," he said.
"We also are very excited about the prospects for selling electricity on both the wholesale and retail markets in Maine and the rest of New England through the company's marketing arm -- PP&L EnergyPlus," said Champagne. "These generating facilities and transmission rights provide us with a diverse portfolio of resources that allows us to establish an excellent base of operations in New England."
As part of its New England strategy, PP&L Global also is evaluating the development of a new gas-fired power plant in Wallingford, Conn. And, another PP&L Resources subsidiary is managing wholesale energy marketing, trading and risk-management for Energy New England, the largest wholesale aggregator of public power system load and generation assets in the New England region.
PP&L Global purchased the assets for $79 million. The closing was approved by the Federal Energy Regulatory Commission, the Maine Public Utilities Commission and other agencies.
The agreement is the result of Bangor Hydro's auction of its generation and generation-related assets in accordance with Maine's electric utility restructuring law, which took effect in late 1997. Under the law, Maine's investor-owned electric utilities must divest all of their non-nuclear generation assets and generation-related businesses before March 1, 2000.
The law is intended to create an open market in which retail consumers will choose their own suppliers of the electricity that flows through the wires. The management of the "wires" or transmission and distribution business will remain the regulated function of the existing utilities.
In addition to the hydro stations, PP&L Global is purchasing Bangor Hydro's 8.33 percent interest (52 megawatts) in Wyman Unit 4, a 620-megawatt oil-fired power plant in Yarmouth, Maine.
PP&L Global also expects to acquire in the near future Bangor Hydro's 50 percent interest in the 13-megawatt West Enfield hydro station that will continue to sell power back to Bangor Hydro under a long-term power purchase agreement.
The seven hydro stations being sold by Bangor Hydro range in size from 2 megawatts to more than 13 megawatts and are located along the Penobscot River Basin and Union River in Maine. PP&L Global will manage the hydro facilities with employees transferred from Bangor Hydro. Jim Potter, PP&L Global's development manager for the project, has been named as executive director of Penobscot Hydro, LLC, the PP&L Global subsidiary that will operate the power plants.
Champagne said that all 19 employees of the Bangor Hydro facilities have accepted jobs with Penobscot Hydro.